Effective marketing is essential for success in today’s fast-paced and always-changing corporate environment. Even though many businesses spend a lot of money on marketing, some important components frequently go undetected or underused.

This article reveals four frequently disregarded marketing strategies that could completely revamp your company. You may obtain a competitive advantage and optimize the growth potential of your business by combining these methods into your marketing campaigns.

1. Make Good Use of Customer Reviews

Customer reviews may make or ruin a company in the digital era. However, a lot of businesses don’t make the most of this important marketing resource. Positive customer reviews not only boost credibility but also drive new customers to your doorstep.

Encourage satisfied customers to share their experiences through online platforms like Google Reviews, Yelp, or industry-specific forums. Additionally, actively engage with customer feedback by responding promptly and professionally, showcasing your commitment to customer satisfaction. By leveraging the power of customer reviews, you can build trust, enhance your online reputation, and attract a steady stream of new customers.

In a recent conversation with Matt Peters, CEO of Search Manipulator, he provided some insight: “Online reviews are an important resource for consumers in the current digital era as they try to make educated selections regarding goods and services. However, it’s not enough for companies to passively collect reviews; they must proactively leverage this valuable resource. By accepting honest feedback, businesses can improve their products, services, and customer experiences.”

2. Prioritize Personalization

Customers want a personalized touch. While targeting broad customer segments is essential, personalization can take your marketing efforts to the next level. A tailored approach in digital marketing gives a company an edge over its competition, much like a personal stylist has a professional edge over a retail salesperson.

You enhance your customers’ experience by tailoring offers and recommendations based on individual preferences. How can you achieve this effect? Use purchase history, browsing behavior, and demographics to fine-tune marketing campaigns. You can also use algorithms and automation tools to deliver content across various platforms like email, social media, and websites. Interact with your audience wherever they are.

But marketers beware: as AI-driven tools and automation are being increasingly utilized, customers will become more attuned to what is meant to sound “like a human.” Creating an authentic, personalized experience will strengthen brand loyalty and improve conversion rates.

3. Choose Quality and Focus on ROI

There is an enormous variety of companies specializing in digital marketing, but the quality of these companies and their tools are just as varied. Be certain to gauge the quality of your marketing company’s advertising platforms and websites. Some companies will create a long list of URLs by publishing your business to lots of free websites, but this does not provide your business with a meaningful ROI.

A better choice in a marketing agency is one that focuses on securing placements on higher ranking sites and will utilize a wide variety of advertising options, including Facebook, Google Ads, LinkedIn, Yelp, etc. A higher quality marketing company will also conduct A/B tests with their ads and demonstrate to your business that they are generating a significant ROI.

4. Incorporate Video Content

Video content has exploded in popularity in recent years. It is a dynamic medium that grabs a potential customer’s attention like no other channel. For some odd reason, many businesses do not take full advantage of this powerful marketing tool.

When built into a well-rounded marketing strategy, video content can offer many benefits. You can create compelling videos that showcase your products, provide tutorials, share customer success stories, or give behind-the-scenes glimpses of your company.

Leverage platforms like YouTube, Instagram, and TikTok to share your videos and engage with your target audience. Video content captures attention and enhances brand storytelling, improves website SEO, and increases social media shares. Through the intentional use of video content, you boost your marketing campaigns and engage with your audience more meaningfully.

Being Innovative Pays Dividends in Digital Marketing

To gain an edge on your competition when it comes to digital marketing, you have to be willing to adopt strategies beyond the “tried and true.” By making good use of customer reviews, prioritizing personalization, focusing on quality and ROI, and incorporating video content—you can differentiate your business from the competition and achieve remarkable results. Remember, success lies in continuously adapting and refining your marketing strategies to meet your target audience’s evolving needs and preferences.

The Federal Reserve has been actively trying to tame inflation for over a year now. Since March 2022, the central bank has hiked its benchmark interest rate 11 times—all in hopes of getting inflation down below 2%.

While the efforts have so far proven unsuccessful (the nation’s inflation rate is 3.2%, as of last week’s numbers), one city has bucked the trend: Minneapolis. 

The Minneapolis-St. Paul metro area’s inflation rate slipped below 2% back in May. By July, it had dipped to just 1%— the lowest of all major metros in the U.S. 

How did the Twin Cities do it? It all comes down to housing.

Bucking the NIMBY Trend 

Shelter accounts for a third of the overall consumer price index, so with ever-rising home prices—not to mention higher mortgage rates—housing has played a big role in the run-up of inflation in recent months. 

So that’s where Minneapolis started. Back in 2018, the city stuck it to the Not in My Backyard (NIMBY) crowd, passing the Minneapolis 2040 plan, which eliminated single-family zoning in 70% of the city’s residential land. 

And the move was an unleashing. “The most wonderful plan of the year,” as the Brookings Institution dubbed it, led to an explosion of new development—and most importantly, more dense housing. 

Duplexes, triplexes, and apartment buildings popped up left and right, and developers no longer had to jump through hoops for zoning changes or face hard-nosed neighborhood opposition. At one point last year, a whopping 1,500 multifamily permits were approved in just one month. Across all of 2022? The city saw about 16,000 new multifamily permits approved—up by about 3,000 from 2021 and even more from years prior.

The extra supply helped tamp down housing cost growth—both for buyers and renters. The median home price in the city currently sits at $382,000, according to Redfin, significantly lower than the national average of $426,000. 

The city has also invested more than $320 million in rental assistance and subsidies over the last few years, tempering local housing costs even further. In fact, according to the Pew Charitable Trusts, Minneapolis rent growth since 2017 is just 1%. Nationwide, it was 31%. 

As Minneapolis Mayor Jacob Frey recently told Bloomberg: “I can’t tell you how many people were like, ‘Oh, look at all this supply, look at all these just brand-new buildings,’ and kind of scoffing at it like this was going to lead to gentrification or rents skyrocketing. The exact opposite has happened.”

Can Other Cities Replicate Minneapolis’ Strategy?

Judging by the latest inflation numbers, Minneapolis clearly did something right. But is it a strategy other cities can replicate? That remains to be seen.

The NIMBY movement has been vocal in recent years. It effectively killed New York Gov. Kathy Hochul’s housing plan earlier this year, which aimed to add 800,000 new housing units to the state over the next decade. It’s also posing challenges in California, Georgia, North Carolina, Texas, and other states across the country. 

Those in this movement come armed with plenty of talking points, such as: Adding more dense housing to suburban areas will cause crime to spike. Property values will drop. Traffic will worsen. It will stretch local services thin or change the character of the neighborhood.

Whether those arguments are true is debatable, but they’re arguments nonetheless. And until cities are willing to take on these movements, mimicking Minneapolis’ approach will be all but impossible.

That said, California, which undoubtedly has one of the biggest affordable housing shortages in the nation, has tried to make inroads. The state is actually suing the city of Huntington Beach for restricting certain development applications. Gov. Gavin Newsom even called the city’s elected officials “the poster child for NIMBY-ism.”  

Considering Huntington Beach filed its own lawsuit against the state, it’s likely to be a protracted battle (and probably not the easiest path for other locales to follow). 

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Logan Mohtashami, HousingWire lead analyst, joins ‘Squawk Box’ to discuss skyrocketing mortgage rates, after the National Association of Realtors warned rates could hit 8% if the economy continues to show strength and the Fed hikes rates again, the impact on the housing industry, and more.

Some business owners just get it. Starting, running and growing a company is their jam. They seem to flow through their day making good decisions, securing deals, and spotting opportunities for growth. They view business problems as fun codes to crack and they enjoy puzzling over details. These people have high business IQ. More than common sense, this is commercial awareness meets pluck. This is an inner knowing of what’s going on and what’s going to take off.

Your business IQ develops with experience, but just because you’ve been in business a long time, doesn’t mean yours is high. Here’s how to use ChatGPT to increase your business IQ.

How to improve your business IQ with ChatGPT

Understand your why

Entrepreneurs with a high business IQ know why they do what they do. This knowledge forms a solid foundation from which they build. Without a strong sense of why, everything you create will feel unstable. Everything that crosses your path takes longer to process because you’re dealing with multiple scenarios case-by-case. Understand what gets you out of bed and keeps you going to never question a move again. Here’s the prompt for ChatGPT.

“I want to understand what motivates and drives me so I can apply the insights to my business. Imagine you are a high-level entrepreneur psychologist tasked with figuring this out. For context, the three things I would say are my biggest work achievements are: [describe your three biggest achievements]. They meant so much to me because [describe why they meant a lot]. I enjoy tackling a challenge when it has these components: [describe the components] and I become demotivated when [explain when you become demotivated]. Based on this information, can you summarize my ‘why’ in a single sentence? Please provide options for what this might be.”

Identify your traction metrics

Do you know what’s working? Can you safely say where your best customers come from, how long you spend on every marketing channel within your company, and how much each one costs per new customer? More than this, do you know how long a customer stays with you, and how this changes based on how they found you? Traction metrics hold secrets and shouldn’t be ignored. Data is a huge component of business IQ. Understand yours more using this prompt.

“My business aims to [describe your short term business goals]. The main drivers towards these goals are [explain the inputs that contribute towards hitting your goals]. Imagine you are a business analyst. Can you outline the main traction metrics applicable to my business? Include both inputs and outputs and when I should track them to check I am on target for achieving the goals.”

Identify black swans

“Everyone has a plan until they get punched in the mouth,” Mike Tyson once said. It’s easy to run a business when things are going well, it’s less easy when unprecedented events, known as black swans, hit and there’s no blueprint for how to move forward. Business IQ means knowing what to do in any situation, but you can get a head start by asking ChatGPT what those situations might be. Ask for ChatGPT’s wildest dreams of what could go wrong and think about what you’d do should they come to pass.

“My business operates within the field of [explain your field or industry]. A black swan event is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Can you preempt some potential black swan events in my industry or in business in general, that could happen within the next decade? For each, suggest what I would do to mitigate the risk of it being detrimental.”

Find hidden performance indicators

To break records, you have to make records. Hone your business IQ by knowing the lay of the land before you take any more action. With this prompt, ChatGPT will suggest a long list of what you should track in your business. Discard any you already track and pay attention to those you don’t. Could there be something in there that would uncover opportunities for growth? Low business IQ means burying your head in the sand. High business IQ means being intentional about what you pay attention to.

“Within my business we track [outline the metrics you regularly track in your business] towards our goals of [describe your business goals]. Play the role of a business analyst tasked with digging into the data. Can you suggest any metrics that we don’t currently track that could be useful indicators of performance? For each one, explain why it could be relevant.” Follow up with “which of those do you think is the most important for us to track?” for further detail.

Create a growth strategy

How intelligent you are within the world of business doesn’t hinge on what you do now, it hinges on what you do in the future. Your success is dependent on your next few moves, but do you know what they are? By now, ChatGPT understands you and your business and is ready to help you plan the way ahead. Grow your business IQ by collecting all the options before you whittle them down to just a few. Use this prompt to find ideas you may not have thought of yourself.

“Given what you know about my business, my ‘why’, our traction metrics and hidden performance indicators, can you suggest a strategy for growth? Include potentially far-fetched ideas that we likely haven’t thought of before. Incorporate a period of testing for each idea and explain how I could test its effectiveness before continuing or moving to something else. Put the ideas in order of quickest win to most effort.”

How to become a smarter entrepreneur with ChatGPT

Develop your business IQ with these five simple prompts for ChatGPT, to set yourself up for continued success in your entrepreneurial ventures. Define your why in a single sentence, identify the metrics that make the difference, pre-empt black swans, find the hidden KPIs, and make a growth strategy for the future. You’re already smart, but you can get smarter, and this is how to make that happen.

This article is presented by PropStream. Read our editorial guidelines for more information.

In the first half of 2023, only 14 of every 1,000 U.S. homes changed hands. That’s down from 19 out of every 1,000 during the same period in 2019 and represents the lowest share in at least a decade.

Needless to say, the housing market is experiencing a slowdown, leaving some prospective investors uncertain whether now is a good time to get into real estate. However, with the right strategy, you can make money in any market.

In this article, we’ll explore factors to consider before investing in real estate, market trends to watch, and which investment strategies these call for.

Factors to Consider Before Investing in Real Estate

Before investing in real estate, get your financial house in order. That means maintaining a steady income, building an emergency fund, reducing debt, and keeping a high credit score. The more financially secure you are, the better positioned you will be to buy (and secure financing for) an investment property.

Also, determine how much risk you’re willing to take on (i.e., your risk tolerance). Though real estate tends to be more stable than other investments, such as stocks, it still comes with risks. Being aware of these is crucial to making informed investment decisions. 

Lastly, consider your investment goals: Are you looking for long-term appreciation, regular rental income, a quick profit, or some mix of the above? Your objectives will have a major impact on when and how you should invest.

The best time to get into real estate is when the right deal presents itself, and you’re in the financial position to take it. But the right deal will look different based on market conditions and trends. 

Here are five factors to watch right now and how they might impact your investment strategy.

Market cycles

Real estate follows market cycles. On a macro level, these can be broken down into four phases: 

• Recovery: This is a period of expansion that follows a market downturn. Consumer confidence and demand increase, and property values go up.
• Peak: This is the height of the real estate market cycle. Housing demand and activity are at their strongest, leading to high property values. 
• Contraction: This is when the market starts to cool down. Housing demand and property prices begin to fall, and sellers may struggle to sell their properties.
• Trough: This is the bottom of the real estate market cycle. Buyer demand and housing activity hit a low before the market starts to recover, and the cycle repeats.

As an investor, it’s important to understand the current phase of the market cycle. Right now, we are arguably in a period of contraction, which means purchasing a property may be less attractive due to potential short-term depreciation or high financing costs. Consequently, taking a long-term buy-and-hold strategy, finding rental properties that cash flow now, and exploring creative financing options may be worthwhile.

If you’re worried about a major housing crash (the trough phase) in the near future, know that these are hard to predict and only occur about every 18 years. 

In addition, the housing market also undergoes seasonal cycles. In the winter, housing activity slows down because few want to move when it’s cold. Then, in the spring, it starts picking up again. By summer, home sales usually reach their peak. 

For investors, this means you may have more property selection in the spring and summer but more bargaining power in the winter (when buyer competition is lower).

Ultimately, savvy investors can make money in any market. The key is to have a broad range of investing strategies at your disposal.

Mortgage rates

Mortgage rates can directly impact your real estate investing strategy. The higher they are, the higher the cost of financing an investment property. Consequently, the potential return must be that much higher to make the investment worth it.

Since last November, mortgage rates have been hovering around 6% to 7%. This has kept many homeowners with mortgages locked in at or below 4% from selling. It’s also dampened buyer demand. 

However, the current rates appear to be the new normal and may even go higher. (Keep in mind that 7% is still relatively low by historical standards.)

As a real estate investor, this means you shouldn’t count on lower mortgage rates anytime soon. So, if a property deal looks good on paper now, potentially getting a lower mortgage rate in the future shouldn’t hold you back. Plus, even if mortgage rates drop, you can always refinance your mortgage later.

Rent growth 

Rent growth refers to the overall increase in rental prices over time. It’s an important metric for landlords, who depend on it to cover their rising property expenses (e.g., from property taxes and home insurance) and to make a profit from their investment. 

While rent growth generally keeps pace with inflation, it went negative for the first time since 2020 in May, when asking rents dipped by 0.6% year over year. In other words, new rentals are commanding less in rent than they were a year ago.

For investors, this trend may be concerning. After all, you want to be able to rent your properties for more in the future, not less. 

However, keep in mind that negative rent growth doesn’t apply to existing rentals, which tend to be sticky (i.e., more resilient to market changes). So, as long as a rental property deal doesn’t depend on raising rents in the foreseeable future, it may still be a worthwhile investment. 

Lastly, the specific market you are investing in will determine the rent growth, so make sure you research specific regions to understand if your region is in growth or decline.

Regional market differences

Real estate markets vary widely by region. For example, some states have stricter landlord regulations than others. Similarly, property values may be dropping in one city and going up in another. 

In fact, right now, there is a stark divide between housing markets in the West and the East. In the West, home values are generally falling, while in the East, they are still rising. Staying on top of such trends can help you decide where and how to invest.

Pro tip: Use PropStream’s Property Search to identify where home values are rising and where they are falling.

Other market trends

Finally, pay attention to other real estate market trends. For example, the rise of remote work during the COVID-19 pandemic and the failure of many return-to-office policies since then have left many office buildings vacant or underutilized. This puts downward pressure on commercial real estate values, which can indirectly impact the value of nearby residential properties. 

Similarly, the shift to remote work created pandemic boomtowns, many of which are now suffering the most from market corrections. 

Another unique trend to note is the recent boom in new construction homes. According to the Wall Street Journal (subscription required), “Newly built homes accounted for nearly one-third of single-family homes for sale nationwide in May, compared with a historical norm of 10% to 20%.” 

The reason? There is a massive shortage of existing home supply. While these new homes may be good investments in and of themselves, the increased supply may also dampen the rise in nearby home values.

Final Verdict

As you can see, market conditions vary, but there are always ways to adapt your investment strategy to them. For example, you may need to pursue seller financing when mortgage rates are high, make a cash offer to sweeten the deal in a seller’s market, target off-market properties when housing supply is low, or consider a fix-and-flip strategy to avoid losing profits to a looming market correction. 

Whatever you do, remember to take the long view. There may be short-term risks, but any property held long enough usually goes up in value. In real estate, time in the market usually beats timing the market.

Need help finding your first investment property? Try PropStream. It can help you find good deals in any market. Sign up for our 7-day free trial today and get 50 leads on us!

Important note: PropStream does not offer financial advice. This article is for educational purposes only. Please consult a financial professional for further assistance.

This article is presented by PropStream

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Nowadays, even though tech startups usually start locally, they succeed globally. Your small tech project likely has more in common with a multinational corporation than with a traditional geographically-bound business of the same size. In a way, your startup would have to think multi-culturally right from the start.

While this has strategic implications, in this article we’ll discuss the strengths of a couple of business cultures around the world that founders can draw inspiration from.

1. Silicon Valley’s Acceptance Of Failure

We have to start at the birthplace of modern Startup Culture. Silicon Valley, California, USA, has become synonymous with innovation and entrepreneurship.

If you have to nail down one major difference in the entrepreneurial culture in Silicon Valley compared to the rest of the world, it’s in the mindset that failing is OK. This unique social validation is what gives entrepreneurs the needed courage to try over and over again until they find a path forward without fear of being punished socially for failing.

As a founder of an innovative project, you are very likely to fail. And that’s totally fine. It is part of the process.

Internalize this mindset, and you’ll have the necessary persistence and resilience to find success eventually.

2. Japanese Kaizen: Continuous Improvement

“Kaizen” is a philosophy of continuous improvement. Japanese businesses prioritize incremental progress and iterative refinement, which can be immensely beneficial to startups. Remember that due to limited resources and time constraints, you’ll often have to launch imperfect products, which means that you’ll have to continuously improve on the go in order to grow.

Incorporating Kaizen into startup culture means emphasizing the importance of learning from mistakes, regularly assessing processes, and seeking small but impactful optimizations. Cultivating a mindset of gradual enhancement would help you find product-market fit faster while at the same time allowing you to reach with time the high product quality needed to move your business into its more mature stages.

3. German Engineering and Precision

Germany is renowned for its engineering prowess and meticulous attention to detail. The German business culture values precision, reliability, and quality.

In the context of startups, this often means restraining yourself from trying to do too much with the little resources you have in order to guarantee that you’ll have the needed resources to do what matters up to a very high standard.

Even if you can’t afford to offer a lot, it’s great if the little you are offering is of exceptional quality (and value).

4. Israeli Chutzpah: Boldness and Audacity

Israel’s startup ecosystem is renowned for its chutzpah—a Yiddish term referring to audacity and boldness.

If your project is innovative in any way, then by definition you need to be willing to challenge the status quo. Moreover, considering the risk of failure, innovation is only rational if the upside potential is large enough. This means that you need to dare to be ambitious.

In a way, failure is equally painful regardless of the level of your ambition.

5. Scandinavian Work-Life Balance

The Nordic countries, particularly Sweden and Denmark, are celebrated for their emphasis on work-life balance. While this is often not possible to achieve as an entrepreneur (and especially as a startup founder), it is crucial not to forget its importance.

If you fail to preserve your mental health while working on your project, then success would be very hard to find. Moreover, by building a community around your project, you need to be mindful of the well-being of all your important stakeholders, otherwise, you’ll face negative consequences in the long run.

At the end of July, the National Association of Realtors (NAR) had nearly 1.6 million members, which works out to about 2.4 Realtors for every home actively for sale. A report from the Consumer Federation of America (CFA) notes the surfeit of agents is costing the industry, harming consumers, and reinforcing high commission rates. 

Lenient licensing requirements and high real estate agent turnover mean many of these agents are inexperienced and underqualified. Of those who are competent, even fewer have the knowledge and experience to serve real estate investors. 

Demand for homes surged during the pandemic, which made real estate look like an attractive career opportunity. Layoffs in other industries left job seekers looking for new career options, and many of these people needed more flexible work arrangements. 

And the path to getting a real estate license is quick and easy in most states relative to other professions. According to the National Association of Realtors, more than 156,000 people became real estate agents in 2020 and 2021, a 60% increase from the prior two years. 

Of course, many of those real estate agents won’t last in the field. “Being successful in real estate is a hustle, and most people drop out after two years because of how difficult it can be to build a sustainable business,” says Kristina Morales, a Realtor with over 20 years of experience in multiple markets. “This alone naturally reduces the number of Realtors, but they are quickly replaced with new ones since the barrier to entry is so low.” 

The NAR views the turnover as a healthy consequence of competition. But while the industry may naturally spit out the real estate agents who aren’t cut out for the job, it doesn’t necessarily happen before these agents have provided homebuyers with guidance on what may be the most significant purchase of their lives. 

The Draw of the Real Estate Profession

Reality TV shows make the real estate industry look glamorous, says Martha Gaffney, a licensed real estate broker and strategic real estate advisor at Real Estate Bees. “Even before reality TV shows, many came into the business looking for a quick buck,” she adds.

After all, buyers and sellers agents each receive 2.5% to 3% commission in most areas, and the median sale price for a home in the U.S. is $416,100, according to the Federal Reserve. That said, many agents don’t realize how much effort they’ll need to put in to get clients or that they’ll pay about half their earnings to their brokerage firm. 

So, how do you become a real estate agent in the first place? In many states, you only need to complete a few weeks of coursework and pass a multiple-choice test. The cost for online training can be less than $100. 

For example, in Massachusetts, becoming a real estate agent only requires 40 hours of education and passing a licensure exam. In the same state, you need 1,000 hours of training to become a licensed barber. To be a certified general appraiser, you need at least 300 hours of education plus 3,000 hours of experience. You also need a bachelor’s degree. 

“I definitely think the requirements for becoming a real estate agent are too loose,” says Morales. “These loose requirements saturate the market with Realtors, and that saturation dilutes the Realtor’s value.”

A 2015 report from the NAR drew the same conclusion, saying: “The real estate industry is saddled with a large number of part-time, untrained, unethical, and/or incompetent agents. This knowledge gap threatens the credibility of the industry.”

Of course, there are benefits to the current path to licensure. “I’ve seen many instances where the low barrier of entry has allowed someone to enter and create a very successful career for themselves, where other opportunities would typically not be available,” says Andrew McGranaghan, chief development officer at Wallace Real Estate, the largest independent brokerage in East Tennessee. “It’s the American dream, where hard work and dedication can lead to a very successful business, where a college degree isn’t necessary.”

Tightening requirements could create unnecessary roadblocks for marginalized communities and further decrease their representation in the industry, Business Insider reports. But on the flip side, there are problems with keeping real estate licensure easily accessible. 

“The low barrier of entry attracts many who choose to dabble in real estate rather than make a career of it,” says McGranaghan. “They hold their license for personal use or as a part-time side job and never fully commit to learning and studying the craft.” There’s a delicate balance to be achieved when considering stricter licensing requirements, McGranaghan notes. 

High Turnover in the Industry

“Turnover is very high in real estate. It’s estimated that 87% of Realtors leave the business within their first five years,” says McGranaghan. That creates challenges for brokerages that want to invest time and money in training their agents. As a result, he says, “200-agent offices with one broker are becoming more of the norm.” 

Wallace Real Estate aims to beat the trend by focusing on training and supporting new agents. But it’s up to the consumer to seek out brokerages with that ethos. 

Morales says homebuyers and investors shouldn’t necessarily avoid working with new agents, but they should request that the agent partner with a more experienced team member. However, not all homebuyers have the knowledge or experience to recognize that working with a new agent could be a problem. 

“The risk of working with an inexperienced agent is that a consumer may leave money on the table—whether that is from paying too much for a home or not receiving the property value for the home you sell,” says Morales. “In addition, there is litigation risk if an agent does not know how to properly structure a deal or provide the required disclosures/documentation.”

For the NAR and for many brokerages, turnover and the continued overabundance of agents may mean more profit since agents who want to use the “Realtor” designation must pay membership dues to the NAR, and new agents often bring new clients, which leads to extra commission for the brokerage. However, Gaffney says, “The turnover just doesn’t help the consumer.” 

In other industries, competition might drive players to lower their prices to stay in business. But commissions for real estate are generally fixed, with the agent’s level of experience and effort having no bearing on what they are paid. 

High turnover only means a glut of inexperienced agents who may not provide the best guidance. And the lack of sufficient business per agent requires agents to charge high commission rates relative to some other countries, the CFA notes. 

Are Changes to the Industry Needed?

Potential solutions to the problem include stricter education requirements, a comprehensive supervisory period to give real estate agents real-world experience before licensure, and a change to the commission structure. But McGranaghan believes it’s up to the consumer to research brokerages and vet agents. 

Gaffney says that reduced commissions for inexperienced agents may help agents view real estate as a “long-haul career.” But Morales disagrees, saying, “They should be entitled to the same pay, as they are likely working just as hard to get a deal.” Additionally, some real estate agents who are new to the industry are just as successful and knowledgeable as those who have been doing the job for years. 

Still, each expert agrees that more robust education requirements could help the industry and consumers. Morales says she works to reverse customers’ perceptions about real estate agents because the level of education they require doesn’t garner respect. But, maintaining access to the career path for ambitious self-starters also should be considered. 

Additional requirements to maintain real estate licensure might also increase the number of qualified agents. “States should have in place a requirement that Realtors must do a certain number of transactions in order to maintain/renew their licenses,” Morales suggests. 

How to Find an Investor-Friendly Agent

The oversupply of inexperienced real estate agents creates challenges for investors trying to find an investor-friendly agent. Gaffney says relying on referrals from your network can be a great start. Investors can also use the BiggerPockets Agent Match tool to find what they need.

When interviewing agents, Morales says to ask about:

• Experience: Ask the agent if they currently work with investors and how many transactions they do per year. If that number is low, ask if they have a mentor or are willing to team up with a more experienced agent. Morales also says to ask, “How well do you know the area that I am looking to purchase in?”
• Availability: If you need the flexibility to see properties on nights and weekends, ensure the real estate agent is available.
• Relationships: Ask if the real estate agent has preferred contractors for renovations or repairs, and whether they work with an investor-friendly lender, title company, and home inspector.
• Willingness: Since you may write low offers unlikely to be accepted in the current environment, assess the real estate agent’s willingness to put time into finding the right property. Morales says to ask, “Are you willing to write 50 offers before one gets accepted?”

The Bottom Line

We don’t need 2.4 Realtors for every home on the market, and the glut of agents creates problems for everyone involved. New agents often don’t earn enough to make ends meet, while experienced agents lose commission, and the industry takes a reputational beating. 

Homebuyers and investors must work to vet real estate agents, and those who aren’t aware of the wide knowledge gap between new and seasoned agents may be led astray by bad advice, causing them to lose money or even face legal repercussions. Changes to licensing requirements may be in order, but in the meantime, individual investors need to work hard to screen for the best agents.

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Mr. Cooper Group CEO Jay Bray joins ‘The Exchange’ to discuss hedging rising rates with investment in mortgage servicing, developing a competitive auction market for real estate, and the home supply imbalance keeping prices elevated.