Know your market
Though more real estate professionals are beginning to work internationally thanks to globalization and the ease of communication, most agents continue to work close to home. This brings us to an important and often-overlooked fact about the real estate industry—namely, that it isn’t a single industry at all, but rather a collection of local and regional markets.
Though in many ways we’re no longer limited by geography and boundaries, the real estate profession is still regulated at the state level, not the federal level. True, some of the differences in laws practices between states may seem arbitrary; others, however, exist for a good reason. But regardless of how you feel about this reality, you must accept it and plan accordingly
The dynamics of your market can have a profound effect on how you conduct your business, and with whom—and the lower to the ground you are, the more evident this becomes. To illustrate, let’s consider two very different urban rental markets: Boston and Los Angeles.
In Boston, students make up a fourth of the population, and inhabit an even larger share of the city’s rentals. This means agents in Boston experiences two rushes: First from January to May, when the undergraduates start looking for a place to live, and then from May until mid-August, when graduate students and young professionals get their acceptances or job offers. The vast majority of leases run 12 months, from September to September. Off-peak leases and shorter arrangements, including month-to-month, are difficult to find and usually more expensive. There are a few large management companies, but agents and agencies tend to dominate Boston’s real estate market; though most properties are advertised online, renters must almost always go through an agent to get to them.
By contrast, Los Angeles’s rental market is characterized by flexibility. Though it has a similarly high population of students, they make up a smaller overall proportion of renters, leading to more variation in leases. Since Los Angeles is not a city governed by public transportation, most residents drive, which means that renters can be less picky about where they live in relation to where they work or learn. Whereas Boston occupies less than 90 square miles, Los Angeles counts 500 square miles within its borders.
Consequently, though Los Angeles has over five times as many inhabitants, its population density is a third lower than Boston’s. That means there are fewer people competing for more properties, so it’s easier to find a decent place to live, which decreases demand for agents’ expertise.
Consequently, agencies are less dominant in Los Angeles, with more property owners handling their own marketing and working directly with renters. Less competition also tends to mean fewer hoops for renters to jump through, which translates to more informal, less stringent contracts.
At the same time, as a huge hub for the entertainment industry, Los Angeles has an unusually large proportion of people looking for expensive, high-quality rentals. Unlike the typical rental market, competition in the high-end market is fierce, which means agents handle such listings almost exclusively.
As these two examples show, your location as an agent has an enormous effect on how you do your job. The technologies and software that work for agents in New York and San Francisco may not be right for agents in Minneapolis or Detroit. It’s up to you to learn what aspects of your business you need to focus on and what solutions to employ in order to be responsive to your clients’ needs.