At first, owners and managers of residential real estate brokerages in northern Nevada scrambled to stay alive as the housing boom collapsed.
Now some are making deep changes in their business philosophically as much as operationally as they expect that lower prices and reduced transaction volumes are likely to stick around for a while.
Some observers of the industry think even more change is on the horizon, and the residential real estate business will look dramatically different when it emerges from the current downturn.
The current market continues to place a premium on brokers' ability to recruit and retain experienced agents. A study by the National Association of Realtors a couple of year ago found that agents who have at least 16 years experience report median gross income that's five times higher than agents with less than two years experience.
And while the typical agent in the association's study completes 10 transaction sides representing either a buyer or a seller each year, the number of transactions rises sharply as agents gain experience.
Experience pays off in subtle ways, says Rick Lund, a broker and owner with Ferrari-Lund Real Estate in Reno.
Banks, for instance, play an ever-greater role in the residential market as they seek to sell properties they've taken back through foreclosure.
"Banks don't want to work with people who are fresh off the street," Lund says.
And experienced sales people are more likely to have developed a support network appraisers, title officers, mortgage bankers who can help clients find their way through complex markets, he says.
On the other hand, says Amy Lessinger, broker and co-owner of RE/MAX Realty Affiliates in Reno, some experienced agents have difficulty learning new skills or changing their approach to meet the new realities of the market.
"We have to be so up on everything," Lessinger says. "These regulations are changing by the minute."
She notes that just within the last six weeks, for instance, Freddie Mac, the Federal Housing Finance Agency and the New York Attorney General rolled out a new Home Valuation Code of Conduct that brings changes to the relationship between real estate agents, appraisers and lenders.
The constantly changing landscape brings a requirement for a steady stream of training.
Dickson Realty developed a toolkit to walk its agents through the complexities of a short sale in which a lender agrees to accept less than the outstanding amount owed by a borrower who is selling a home.
"We put a lot of effort in that," says Dan Rider, a broker/owner with Dickson.
The company also is joining with Wells Fargo to provide training on new mortgage instruments, and it's working with agents who want to earn designation as a Certified Distressed Property Expert through a Florida training outfit.
Some real estate agents, meanwhile, are rethinking their financial deals with the brokers who run their offices, says Mike Veatch of Valley Realty and Management in Carson City.
When times were flush, he says, some agents figured it made sense to leave traditional offices in which commissions are split between the broker and the agent. Instead, they sought out brokerages that charged a fixed monthly fee a "desk fee" in the business that remained unchanged no matter how many transactions they closed.
As the number of transactions slows, some agents are migrating back to offices that split commissions.
"It's easier on them during down times," Veatch says.
Sales psychology is changing as well.
Where agents once spent a great deal of energy qualifying buyers, Lund says they now spend an equal amount of time qualifying sellers.
Sellers who aren't realistic about pricing, he says, waste the time and financial resources of agents.
And sellers' motivations often are different than they were in years past, says Rider.
"We're really dealing with a disengaged seller," he says, noting that as much as 80 percent of residential transactions represent some sort of distress on the part of property owners.
Banks, Rider says, generally are motivated by a desire to move foreclosed properties off their books as quickly as possible and aren't driven by a desire to squeeze every dollar out of a sale.
Owners who face foreclosure, meanwhile, sometimes have simply given up hope.
The changes of the last couple of years may be only the start of a revolution in the residential brokerage business, says Sherry Chris, the president and chief executive officer of real estate franchiser Better Homes and Gardens Real Estate LLC.
Speaking at a real estate symposium sponsored by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, late last year, Chris said the market's downturn is only one of the woes facing brokerages.
They also face a new-age consumer with easy access to online information, an aging sales force (the median age of a real estate agent in 2007 was 51), and a plethora of competing technology products, Chris said.
Particularly vulnerable, she said, are firms with high fixed costs, those that are unable to make quick decisions and those that think they'll simply ride out the current storm and get back to business as usual.
Instead, she said, survivors will include brokerages that either decide to go big or specialize.
And a key, she said, will be focus by brokers on the profit rather than the gross revenue generated by individual agents.
