While other people are preparing for the holidays, many real estate agents and their brokers are working on their business plans for 2009. This is especially important now since 2008 was such a challenge and 2009 projections are up for grabs.

Brokers are now sending out postcards or letters to agents trying to entice them to join their brokerage. Some need to increase their number of agents so they can increase their revenues. I've received three such letters just this week - and, no, I won't be changing because I'm only interested in representing the No. 1 company - Real Living.

The end of the year is the time when we see agents switching to a different broker or doing some soul-searching to decide whether to stay or leave the industry. Next year's Board's fees are due this month (over $800 in central Ohio) and if an agent hasn't been doing well, they may decide they simply don't have what it takes to make a living in this business. The average gross income for an Ohio agent is only around $35,000 per the OAR. Since agents are self-employed, all expenses must be paid from that minimal amount, leaving not much money for household expenses.

We've already seen some small brokers merge and close offices to consolidate overhead costs. Some agents have already quit the business - 7% of the CBR members did so in 2008. 2009 will likely see a further decline. That's not viewed as a negative, since having low-producing or part-time agents is a problem the industry faces nationwide.

You don't want to go to a dentist or a CPA that only has 2 clients a year, or has another full-time job, do you?

The one thing that we do know is that the word "Change", that has become so popular politically, will also apply to the real estate industry in 2009. The change is being driven by the Internet, new technology, new equipment (like smart phones) and of course, the mortgage industry. You may already have noticed some of these trends occurring. Here's what is being said in the industry blogs or by other self-appointed gurus:

Broker, Agent Trends

• Survival of the Fittest will be the mantra for 2009. Brokers or agents who entered the business in the early 2000's because "pickings were easy" will either leave the business or they'll need to change their business model and skillset to successfully compete.
• The Internet will continue to increase as THE main means to sell homes. Brokers and agents need a good web presence to advertise their listings on many sites not just the broker's site or Realtor.com. The "old-fashioned" brokers and agents are projected to eventually go out of business.
• Agents need technological skills because clients expect their agent to know how to market homes on the Internet, to know how to place the listing on multiple sites (not just their broker's site) and to know how to achieve good SEO so buyers "find" the homes.
• Photography is THE most critical skill for an agent to possess because buyers decide in a nanosecond whether they're interested in a home. Bad photos or no photos are no longer tolerated by buyers. If there is no photo or if the photo does not make the home appealing, buyers are quick to click the "NEXT" mouse button.
• Print advertising is dead. In 2006, only 7% of the buyers found their home using that medium, and that percentage is expected to decline even more when the next survey is done. The only agents who are continuing to use this medium are agents who don't know how to use the Internet to sell homes.

Seller Trends

• Too much available inventory requires a seller's home to be well-staged for the photos and in prime condition for showings. "As-is" only is appropriate for foreclosed or REO homes. Buyers no longer want to fix-up what a seller hasn't.
• Sellers absolutely cannot be overpriced when they go on the market. In fact, it's better if they start off a little under the market, as they'll get a quicker sale at a higher price than if they sit on the market and have to keep reducing the price. (this is a hard one for sellers to grasp.)
• Real estate commissions increased in 2008 because sellers recognized they needed the pros to get their home sold. "You get what you pay for!" This is why some of the minimum-service brokers have gone bankrupt or left the business. With homes taking longer to sell and more marketing expenses incurred as well as the agent's time cost, agents are willing to walk-away from listings (or buyers) that are apt to be a money-losing proposition.

You pay more for a good CPA or attorney, so expect to pay more for a good agent.

• Sellers are interviewing agents by Googling them. Sellers are doing fewer in-person interviews of agents. Rather, they're Googling the agent's name to check their web presence and to see how well or how poorly the agent does at marketing their current listings. They also consider whether the agent is more focused on marketing themselves vs their listings.

Buyer Trends

• Buyers are viewing fewer homes in person than they did 5-10 years ago. Why? They use the Internet to look at the photos. They use Google maps and Google Street Views to look at the neighborhood, proximity to highways and railroads, and to see if there are power lines or towers behind the home. Buyers use these tools to ELIMINATE homes rather than to SELECT homes.
• Buyers will need good credit scores and a down payment in order to buy a home. Gone are the days of 100% mortgages with questionable ability to make the mortgage payment. That's what got us into this "mess".
• Buyers will need to be pre-qualified prior to viewing homes. With stiffer rules by lenders, agents need to know the buyer can be approved for the price of homes they will be viewing. If state laws allow, agents may also require a retainer (ex. $300-$500) from the buyer prior to viewing homes. Doing this ensures that the agent will be paid for their time and expenses (like attorneys or doctors) even if the buyer decides to not buy. Some newer broker business models charge buyers $XXX for every Y number of homes shown.

Topics being bantered about

• Buyers paying for their broker/agent rather than the listing broker paying the buyer broker. Mortgage and RESPA rules/procedures would need to change to allow this.
• Brokers hiring agents as employees. As you can imagine, there are lots of pros and cons of this one. Given we work 70-80 hours a week, how would "overtime" be handled? If agents are held to a 40-hour week, would a client be required to use multiple agents (1st shift, 2nd shift) during their transaction? Would clients be willing to pay based on a "fee for service" rather than a commission as a percent of the purchase price? How would clients feel about always having to meet their agent at the office (like a CPA or lawyer) rather than the agent driving to their home? Would clients miss that "personal touch" that we now provide?
• Fee for Service vs Commission. Unfortunately, agents now do a lot of work for free. If we list a home and the seller decides to not move/sell, we don't get reimbursed for our marketing expenses and time. If a buyer looks at 20 homes and decides to continue renting or stay put in their current home, we don't get paid for our time or gas. Some sellers want open houses, some don't. Should those sellers who want 5 hours of our time on a Sunday afternoon pay more than those who don't? Shouldn't a seller who prices their home right so it sells in 30 days pay less than a seller who insists on overpricing and the home takes 5 months to sell? Lots of pros and cons on this issue as well.

No one knows what 2009 will hold for the industry, but one thing is certain ... the industry WILL continue to evolve into something new and exciting.

Thanks to my innovative broker, Real Living, and to my wonderful clients, I had a great year in 2008! I'm looking forward to 2009 being even better.