As the COVID-19 pandemic gradually begins to recede, we have now started the process of sifting through the wreckage and deciding what to discard and what to salvage from such a profound and prolonged disruption. When it comes to the real estate business, probably the trickiest factor in the mix will be managing the expectations that have shifted around in all that chaos.
As we all know, expectations are slippery things at the best of times. They’re based less on data or facts and more on jumbled scraps of emotion, anecdotes, and observation. And when it comes to residential real estate markets, the expectations that have taken root in a frenzied market have been even more problematic than usual.
Part of the reason for that is the sheer number of changes that have taken place over the course of the protracted lockdown.
Among them, agents and brokers learned to use new technology in new ways, the manner of connecting with people internally and externally shifted as remote work replaced office life, leaders faced new challenges in terms of sustaining office culture and teams from a distance, support staff found their groove working from home, buyers added new lifestyle features to their wish lists, and protocols for physically viewing homes became much more stringent.
And all of this took place, it must be noted, in a residential market that was ablaze, setting new records in sales volumes and prices.
The common thread with each of these individual factors is their collective impact on expectations on all sides of a transaction. The challenge going forward is how the inevitable recalibration in the real estate business will be shaped and managed - and the extent to which altered expectations drive permanent, structural change.
Let’s start with technology.
After a relatively brief scramble to find their feet, brokerages and agents made a quick pivot to a fully virtual sales process and, where any physical showing took place, stringent new protocols. This had no impact on the velocity of sales -- or prices -- and, in fact, proved to be both cost-and time-efficient. The question now, is how will the extreme reliance on technology recalibrate in a sector that’s always been very personal and face-to-face?
Will physical open houses return? Sellers may very well prefer the ease of virtually showcasing their homes and push for that practice to continue. Buyers may be equally enthusiastic to reclaim the opportunity to respectively inspect a home, while agents understandably want to build lasting personal relationships, reinforce networks and generate leads for future sales.
For some parts of the home re-sale transaction, the technology genie will not be put back into the bottle. The use of video, virtual tours and virtual open houses to showcase listings will continue to grow, and will increasingly be expected from clients in the same way as high definition photography is table stakes today. Technology solutions focused on efficiency, replacing low value-added personal interactions are here to stay, and we should expect further growth and innovation.
Technology is also a key consideration in the ways that internal brokerage culture will evolve going forward. While it has streamlined operations, it has also affected the soft tissue of any organization: culture. The habit of checking into the office personally - and all the informal interactions that come with it - was on the wane even before COVID struck. With that habit broken, it’s been a challenge to lure support staff and agents back. Again, conflicting expectations are at play.
For those who yearn for the in-person human connection, there might be some good news coming, especially if you look at what’s happening in the United States (where they are ahead of Canada on the second vaccine front). The feedback from partners and colleagues in the US is that the resumption of in-person events has been very well received. And while most are grateful for the video conferencing applications during the depths of the pandemic lockdowns, for many the experience of in-person interactions has highlighted the value of in-person interactions even more.
Hiring and retaining staff, on the other hand, has become a greater challenge than ever. For those who have jobs that can be done remotely, those who don’t want to return to the office and feel pressured to do so, or those who don’t feel like commuting from their new digs in the suburbs, there’s no shortage of other options awaiting them.
Nowhere are altered expectations more apparent than when it comes to listing and selling homes in a frenzied, post-COVID resale market. Remember back in the early days of the pandemic when the few brave, bargain-hunting souls on the buy side suited up in their full PPE to view homes, clearly expecting deals from grateful sellers? What a difference a few months make! Having become accustomed to soaring prices, bidding wars, bully offers, and personal letters from buyers tugging at the heartstrings of sellers to accept their over-ask bids, sellers have quickly come to expect that they will call the shots and, most likely, command a hefty premium over listing price.
As markets stabilize and demand begins to moderate – something that was signalled in data for May - one of the greatest challenges for agents in their role as “trusted advisor” is navigating those expectations and realigning them, while competing with those who continue to overpromise just to get a listing. (You know who you are.)
Agents who play the long game will attest to the benefit of educating their clients with real time data to manage expectations upfront over dealing with disappointment and frustration down the road.
Market signals suggest that, despite the enduring imbalance of supply and demand, we've passed peak frenzy. But of course, that’s just an expectation.
This article was produced in partnership with STOREYS Custom Studio.