How Do You Survive In Real Estate In A Recession?

Surviving an economic recession in the real estate industry is no small feat. The National Bureau of Economic Research (NBER) is the authority for dating US recessions, determining if a peak or trough has occurred in the economy. When times get tough during an economic downturn, it can be tempting to consider leaving the field, but perseverance and a strategic approach can make all the difference. A recession is often identified by two consecutive quarters of negative GDP growth. Here, I’ll share insights on how to not just survive, but thrive during economic downturns, focusing on relationship-building and community engagement. Building strong relationships can also contribute to long-term economic stability.

Hey guys, I’m Nicole Espinosa, the Short Sale Queen. This topic is close to my heart because I speak with many of my students who face these challenges. Today, we’ll dive into how to navigate a recession in real estate and create sustainable success.

Relationships vs. Transactions

Most real estate professionals, especially realtors, tend to focus on transactions. They think, “I need to close another deal” or “I need to get another house under contract.” While this approach is understandable—it’s how we make money—it’s not the only way to build a resilient business. I urge you to shift your focus from transactions to relationships.

Here’s why: 100% of my business comes from the relationships I’ve built. I’ve always prioritized taking care of people and leading with value. This mindset of abundance, rather than scarcity, is crucial. Economic research supports the importance of relationship-building during economic downturns, showing that strong relationships can help stabilize and recover businesses, contributing to economic stability. Sharing knowledge and being a resource for others can establish you as a trusted figure in your community, ensuring business comes to you.

Building Relationships

To build relationships, you need to identify who you should connect with. Ask yourself: Who are the key players in front of sellers, or who are the sellers themselves? For me, it was real estate investors, agents, and homeowners. I tailored my approach to these groups, focusing my content and interactions on their needs.

Locally, I made a name for myself by being active in meetups and online groups. I answered questions, provided valuable insights, and was consistently available. My goal was to be top of mind whenever someone thought about real estate, especially short sales and foreclosures. This approach has never led me to ask for business directly—by giving value, business naturally comes my way. Building relationships during the early stages of a recession is particularly crucial, as it sets the foundation for long-term success amid economic uncertainty.

Consistency in Branding

Consistency is key, regardless of market conditions. I’ve built a niche in pre-foreclosures and distressed properties and maintained this focus for 14 years. Many realtors spread themselves too thin, offering to handle everything from buying and selling to leasing and commercial properties. This lack of specialization makes it difficult for clients to see you as an expert in any particular area.

Instead, find your niche and stick with it. Specialize in a specific aspect of real estate and ensure your messaging and branding reflect this focus. Consistency in your branding helps people remember who you are and what you do, which is essential for long-term success. Various measures contribute information to the perception of a brand’s reliability during economic downturns, similar to how the NBER evaluates economic indicators.

Practical Tips for a Global Recession

1. Diversify Your Pipelines: Ensure you have multiple sources of business. You need at least three pipelines because one or two may dry up during a recession. This diversification helps you adapt to changing consumer demand and maintain consistent business. Diversifying your pipelines can mitigate the economic impact of a recession on your business. Additionally, diversifying pipelines can help maintain economic activity during a recession by ensuring continuous business flow.
2. Stay Top of Mind: Engage with your community regularly. Attend local meetups, participate in online forums, and be a visible resource. This visibility ensures people think of you when they need real estate services, especially when declining consumer spending impacts the market. Engaging with the community can also help you adapt to changing consumer demand by staying informed about their needs and preferences.
3. Lead with Value: Always ask yourself how you can provide value to others. Whether through educational videos, free consultations, or helpful advice, leading with value builds trust and strengthens relationships. A decline in economic activity can significantly affect the real estate market, making it crucial to provide value.
4. Consistency in Efforts: Stay consistent in your branding and messaging. Don’t switch focus or messaging too frequently, as this can confuse potential clients. Your consistency will pay off in the long run. The Federal Reserve Bank plays a crucial role in supporting economic recovery during a recession.
5. Understand Future Inflation: Future inflation or credible promises of future inflation can affect consumer behavior and savings during a recession. Inflation can encourage less savings and more spending, impacting the private sector savings curve. Understanding how economic policies influence inflation can help you make informed decisions during a recession.
6. Role of the IMF: The International Monetary Fund (IMF) plays a significant role in defining and understanding global recessions. Their analysis and data help explain the occurrence of global recessions and the criteria used to identify them.
7. Impact of Oil Prices: Changes in oil prices can lead to economic recessions by raising costs across the economy. A sustained surge in oil prices can increase costs, affecting investment patterns and government responses.
8. Personal Income Trends: Personal income trends can indicate the state of the economy during a recession. Despite declines in real personal disposable income, rising personal income can show that the economy is not in recession. Monitoring economic trends can provide insights into the state of the economy and help you adapt your strategies accordingly. Monitoring personal income trends can provide valuable insights into the state of the economy and guide your business decisions.
9. No Fixed Rule for Recessions: The National Bureau of Economic Research (NBER) does not use a fixed rule for determining recessions. There are no strict, predetermined criteria for identifying recessions, which allows for flexibility in their decisions.
10. Increasing Money Supply: Increasing the money supply is a common response to recessions and liquidity traps. Techniques like quantitative easing can stimulate the economy and counterbalance the effects of reduced spending and saving behavior. Increasing the money supply can stimulate the economy during a recession by encouraging spending and investment.

Surviving a recession in real estate is challenging, but with the right mindset and strategies, you can turn tough times into opportunities. Focus on building and maintaining relationships, stay consistent with your branding, and always lead with value. These principles have helped me thrive, and I believe they can do the same for you.

Remember, it’s not just about surviving—it’s about building a sustainable and successful business that can weather any economic storm.