How Agents Forecast Real Estate Sales in a Slow Market

Learn how agents forecast real estate sales in a slow market due to low housing inventory, rising mortgage interest rates, or any number of reasons.

How do agents forecast real estate sales in this current market?

In this episode of The Brian Icenhower Podcast, I talk about strategies for forecasting sales in an uncertain time. And, I also discuss the fundamental principle that in order to run a successful real estate business, the best offense is a good defense. In other words: know your numbers, operate with a healthy budget, and plan ahead.

VIDEO: How Agents Forecast Real Estate Sales in a Slow Market

How agents forecast real estate sales

Boy is this an important topic right now. It could not be more timely! In a slow market, it is essential that agents know how to forecast real estate sales.

Because we run one of the largest coaching and consulting companies in North America, we have a lot of experience with many of the highest producing agents, teams, brokerages. The fact is, there will be many times in your real estate career where sales will decline. In most places, there is a seasonality issue. For example, in snowy places, sales tend to drop in winter. In hot and humid places, sales tend to drop in the summer.

Real estate sales can decline for a number of other reasons as well. It can happen due to rapidly rising interest rates. It can also happen due to national disasters, pandemics, political events, etc.

Because real estate is a commission-based industry, agents run their own business. It’s really important that agents know what to do when the market slows, and how to prepare for it as well.

If you’re not prepared for a slowing of real estate sales, you will be constantly playing catch up. You will be running a reactive business, which is not very stable or financially secure.

How agents forecast real estate sales will determine their ability to weather any storms that come their way. If agents aren’t able to prepare for the eventuality of a decline in sales, they will ride the real estate roller coaster until they get sick of it and find a new career.

Run your business by design and not by default

How agents forecast real estate sales in a slow market will make or break their business.

If you don’t have the ability to forecast sales, then you don’t have the ability to prepare for turns in the market. And if you don’t have the ability to prepare for turns in the market, maybe it’s time to find a new career.

Today I’m going to help you learn how agents forecast real estate sales in a slow market. This will help you learn how to run your business by design and not by default. To be proactive, instead of reactive.

If you don’t have the ability to forecast sales, then you don’t have the ability to prepare for turns in the market. And if you don’t have the ability to prepare for turns in the market, maybe it’s time to find a new career.
Brian Icenhower

How agents (and leaders) forecast real estate sales

Yes — this isn’t just geared toward agents. This is also beneficial to real estate professionals in leadership positions as well.

You are in the same boat. If you aren’t able to forecast sales or prepare for turns in the market, you won’t just be sinking your personal ship, you’ll also be taking your agents down with you. You’ll wonder why everyone is leaving your team or brokerage, and it is due to lack of foresight on your part.

What’s more, forecasting will also help you learn how to capitalize your business. You always want to build up reserves for your business. Financial advisors like Dave Ramsey, who is also probably the most conservative out there, will tell you to have 6 months of reserves at all times.

That’s a lot. There are people who would argue that 6 months of reserves is too much. Some say 2 months. That seems a little low but everyone is different. I would say the bare minimum would be 2 months of reserves.

Having several months of reserves (which includes everything it costs to run your business for that period of time) will help you survive an unprecedented turn in the market. If you have these reserves, you have capital in the bank. You won’t have to make rash decisions and live paycheck to paycheck.

Don’t cut muscle

Having a plan in place and reserves in the bank means that you won’t have to make rash decisions and cuts in order to survive.

I don’t want you cutting muscle. Don’t fire your coach. Don’t lay off your admin. And please don’t shut down your marketing efforts.

That being said, you certainly can cut fat. In lean times, if you aren’t getting a big return from something or someone, then cut it out. Be diligent in determining these cuts, however. Don’t run purely off of your emotions or you will cut things that should not be cut.

How agents (and leaders) forecast real estate sales will help you keep your emotions out of it.

If you cut muscle, you will be stunting your growth. The whole reason you are stockpiling reserves is to help you continue to grow, even during market shifts.

By continuing to push forward and grow, even during lean times, you will surpass your competition and come out so much stronger.

We saw a perfect example of this happen to many of our clients during the COVID-19 pandemic crisis. When many real estate agents, teams, and brokerages freaked out and cut back and hunkered down, these Top Producers stepped up their game and pushed forward. And, they could do so with confidence because they were prepared.

Be proactive: how agents forecast real estate sales and grow their business during a slow market

When you know your numbers and you are able to forecast, it gives you lots of confidence. You know you will get through this time.

So, ask yourself this. What would it take you to get through a market downturn and “bridge the gap” for your business?

I’m going to help you to understand how agents forecast real estate sales and put themselves in a position to see growth, even during a slow market.

When you know your numbers and you are able to forecast, it gives you lots of confidence. You know you will get through this time.
Brian Icenhower

Seasonality in real estate – how agents forecast real estate sales in a slow market

Seasonality is the example I will use today to explain how agents forecast real estate sales in a slow market.

It is common that winter is the slow season for many markets. In order to prepare for this annual slow down, you should know a few things.

Run your business by numbers

Here is a short list of things you should know when learning how agents forecast real estate sales in a slow market.

Pending inventory

1. Your pending inventory. This will allow you to forecast closings that you have in the next 30-45 days. This is all of the properties you have under contract, pending, offer in acceptance, closing dates established.

2. How much commission you will earn from your pending inventory. This is the cash flow coming in.

3. Your operating expenses. If you don’t know what your operating expenses are, please hire a coach, at least to help you get your numbers in order.

4. Determine the difference. If you know your commissions coming in from your pending inventory, you can subtract your operating expenses and determine where you are at.

Listing inventory

5. Your listing inventory. Having a pipeline chart to help you here will save you a lot of time. And it can be a simple excel spreadsheet — like the one we are giving you as a free download today (scroll down).

6. Your active listings. These are listings you have on the market that have not sold yet. Those are probably going to be 30-90 days out.

7. Listings that you have agreements signed on that are waiting to go active. Those are probably going to be up to 120 days out.

8. Listing leads that you know what to sell this year. Hopefully you’ve been working and building up this lead pipeline before the slow season. If you have a big enough pipeline, usually 30% of these listing leads will list at some point this year.

Buyer inventory

9. Your buyer inventory. These are your serious buyers — hopefully clients you already have a buyer agency agreement with. These are hot leads that you know are going to buy soon. You are usually looking 60-90 days out on buyers.

10. Buyers who are “just looking.” These are your not-so-serious buyers, but they may become serious buyers. They want to buy this year but something is holding them up. These will typically be 90 days to 6 months out.

How agents forecast real estate sales in a slow market: know your numbers

You want to figure out your net profit. That comes from knowing the numbers that we listed above. And once you know this baseline, you need to diversify your streams of income. We coach agents, leaders, and brokers on this high-level topic.

By knowing these numbers and taking steps to diversify your streams of income you can project what your sales will be and be proactive as you “bridge the gap” during the slow season. You’ll have a better idea of what income you can expect and you can move forward with confidence.

FREE DOWNLOAD: Inventory Pipeline

Today, we are giving subscribers a free copy of our Inventory Pipeline. This spreadsheet will help you or your agents see exactly where you are at and project your numbers during a slow season. Be sure to watch the video at the beginning of this blog to learn more about how agents forecast real estate sales.

Want to learn more?

Read The High-Performing Real Estate Team. You can buy Brian Icenhower’s best-selling book on Amazon.
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