(article previously published in May 2020)
We all agreed: we had never seen ourselves in a situation like this before. Faced with such a limiting situation, there are always two possible positions:
The pessimist and the optimist.
The pessimist who does not leave a window of hope open is as dangerous as the optimist who does not recognize the problem and the mistakes made, seeing himself as incapable of overcoming the situation.These days, we have plenty of time to read opinions in both directions. After the analysis, everyone comes to their own conclusions.I will not talk about the health consequences. We all have cases more or less close to us or we could have them. The health workers are giving us a lesson in behavior and we can never thank them enough. I will not talk about the health consequences.
Economically, it is clear that if the wheel does not keep turning, every day that passes will make it more difficult to start up.
We will be able to make some decisions but, unfortunately, there are others that only depend on politicians.
WILL WE GO BACK TO SELLING LIKE WE USED TO?
The answer is yes. The problems are twofold: when and how.
Although there is a more or less global market of trends, the real estate market behaves and will behave differently in each place, in each city, in each state, in each country.
Everyone comes from a trend, and, although this damn pandemic has stopped us all in our tracks, forward planning will make a difference in the speed of recovery.
As Lucy Alexander (columnist in Robb Report, New York) recently wrote, after a brutal 2019, luxury real estate agents really expected 2020 to be their year and then came the shutdown. I recommend you read her article :
“We are in a state of paralysis”: Real estate markets freeze amid global gridlock.”
Another debate is whether this desired recovery will be V-shaped or U-shaped.
I am of the optimistic opinion that it will be V. No doubt there will be corporate casualties but, those who remain hibernated, will want to come back strong and recoup losses (or NON gains) as soon as possible.
OFFICE SPACE
As Marshall Toplansky (Clinical Assistant Professor of Management Science at Chapman University) has stated, the pandemic must make us rethink the traditional office model. The security distances and the advantages that have come about with teleworking, together with the foreseeable layoffs, mean that models of hundreds of square meters dedicated to this purpose are beginning to make no sense. It is interesting the multiplication of data that he makes in this respect in his article:
“THE FUTURE OF THE OFFICE REAL ESTATE MARKET”
Nancy Sarnoff (Real Estate reporter, Houston Chronicle) also gives an apt reflection on how the pandemic must make us rethink the traditional office model. The safety distances and the advantages that have come with telecommuting. This new way of working has lights and shadows.
Recently, “video talking” with a friend who is an expert in business plan development, we gave each other an example that he knows well. If the rent for a gym in Madrid can be around 30.000-40.00€ per month and the capacity is limited and the distance between machines is increased, what business plan can support it? The answer is none. If the lessor does not lower the price, the gym will close. It will not be able to make ends meet.
Therefore, it is up to ALL of us, because we are all affected in a chain of events, to lower our income expectations.
The good news (and this should be the commitment of all of us) is that, gradually, if circumstances normalize, we will all be honest and re-negotiate costs upwards. In this way, we will be able, little by little, to improve the situation.
THE REAL ESTATE SALES AREA
The spaces dedicated to the sales process in real estate developers should also give us food for thought. In my previous article, I wrote about their changes and adaptations to the new situation.
By means of aseptic fiber optics, you must enter your potential customer’s home and reach their heart, the place where important decisions are made.
I am referring especially to the possibility of showing your project before it is built but, obviously, it is also applicable to existing homes through virtual tours generated from immersive photos.
This possibility now forced by restrictions due to Covid-19, has already been used successfully for some time as Allison (B.) Cohen well explains, in her article :“California real estate agents ordered to stop showing homes and conducting inspections due to COVID-19.”
It is now mandatory not to visit properties but it is certainly a highly recommended tool in the first instance. Comments Allison in her article :“Many agents have said they don’t feel comfortable selling a home in these conditions, for the sake of their buyers.”
Howard Payson (Broker and Owner at RE/MAX Town & Country) also says, “I’m predicting that once the floodgates open, so to speak, it will be a market unlike anything we’ve ever seen.”
Yes, it will be very different and, for that reason, we must all prepare for the new scenario. You say that sales are becoming virtual, although nothing like reality can replace it. I fully agree.
Virtual tools are incorporated into the process, but they cannot replace the experience of seeing and touching, something so reviled these days.
Along those lines, Alex Hickey (Business writer for Morning Brew | Editor of Emerging Technology Brew) in his article. “Coronavirus slows down real estate sales” asks a question:
Virtual tours, is it time to shine?
Yes, the answer is yes. Use the tools you now have to play with.
They will help you, at the very least, to maintain the buyer’s enthusiasm as a first step.
We all have the hope of recovering our former lives and the processes that surround us and to which we were accustomed.
HOPE AND ILLUSION
The upper echelons have to make sound decisions that affect us all. They have much more information than we do.
It is your obligation.
The rest of us, to the best of our ability, must reflect and make strategic decisions scaled to our business.
Whoever does this exercise of wisdom and puts it into practice will have a much better chance of being reborn.
Best of luck and good luck.