{"id":2969,"date":"2022-03-28T16:06:49","date_gmt":"2022-03-28T16:06:49","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2022\/03\/28\/opinion-real-estate-leaders-its-time-for-a-course-correction\/"},"modified":"2025-03-13T02:41:11","modified_gmt":"2025-03-13T02:41:11","slug":"opinion-real-estate-leaders-its-time-for-a-course-correction","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2022\/03\/28\/opinion-real-estate-leaders-its-time-for-a-course-correction\/","title":{"rendered":"Opinion: Real estate leaders, it’s time for a course correction"},"content":{"rendered":"\n

Having started my first residential brokerage business in Marin County, California in 2006, I enjoyed 20 months of hyper-growth as a start up only to get slammed by the September 2008 meltdown of the equities markets \u2013 The Great Recession!<\/p>\n\n\n\n

Now is the time for brokerage leaders to change course.<\/p>\n\n\n\n

I had small, boutique offices, a highly qualified and nimble professional staff and all were striving to make our real estate professionals as successful as possible. We also had a fiscal discipline required by a start up without venture capital funding. In Q4 2008, revenues [GCI] fell by 40% and stayed there until March 2009.<\/p>\n\n\n\n

We developed a weekly fiscal focus that proved successful for the next decade. Every Friday at 5 p.m., I received a report on new listings, new escrows, closings, and a rolling 90-day cashflow forecast. We had no choice but to manage the survival of the business.<\/p>\n\n\n\n

We closed the Pacific Union<\/strong> acquisition in August 2009. Our due diligence was all paper-based, no face-to-face meetings with the management team. Our only interaction was with GMAC Home Services<\/strong> [then owned by Brookfield<\/strong>].<\/p>\n\n\n\n

Once closed, I remember my first meeting with the then CFO of Pacific Union. I asked, \u201cHow does cashflow look for the next 90 days?\u201d We now own the business doing $50 million in GCI and an annual run-rate net loss of ($3.7 million).<\/p>\n\n\n\n

The CFO said, \u201cWe don\u2019t worry about cashflow, GMAC writes all the checks.\u201d<\/p>\n\n\n\n

I was clearly stunned and afraid.<\/p>\n\n\n\n

That next day we implemented the exact same Friday at 5 p.m. reporting system described above and it continued 620 Fridays until a year after we were acquired by Compass<\/strong>.<\/p>\n\n\n\n

I share this as they are instruments needed in bad times as well as good times \u2014 the lifeblood of a brokerage business.<\/p>\n\n\n\n

Our industry has enjoyed 10 years of dynamic markets and the last 20+ months of likely the finest of modern-day times. Net income has never been better.<\/p>\n\n\n\n

Now is the time to course-correct for the future \u2014 during 2022 \u2014 which may be another excellent year.<\/p>\n\n\n\n

Now is the time to review every expense in your business. Now is the time to correct the P&L for a market that will clearly adjust in next two years. Inflation, rising interest rates, geopolitical issues, decreases in NCD % all take a toll on your P&L. Top-line growth via units sold and price appreciation tends to mask all inefficiencies.<\/p>\n\n\n\n

Here are many of the actions we executed on and that you may consider.<\/p>\n\n\n\n