Preparing For The Real Estate Downturn: How To Save Costs With Paperless Pipeline

The real estate market is entering a big chill. 

The future is uncertain but one thing is for sure: the post-COVID boom is over.

All indicators point to a downturn in the housing market. Experts like Robert Shiller—who predicted the 2008 housing bubble—suggest there is a possibility of recession hitting within the next year.

Mortgage rates and house prices are increasing due to rising inflation and homebuyer confidence has hit an all-time low in the U.S.

The months ahead are going to challenge everyone in the real estate industry.

The question is: how can real estate businesses weather a housing market that is tumbling, in an economy that could be hitting a recession?

Brokers and agents need to cut costs and adapt their businesses to the changing environment. This presents the potential for new business opportunities.

This article provides advice on how you can prepare for the real estate downturn. In it, we cover:

• The current housing market and how it’s affecting real estate businesses.
• Strategies for surviving in a slowing housing market.
• How to cut costs in your tech stack.
• How Paperless Pipeline can save you money.

💡 How Can Paperless Pipeline Cut Your Costs?

Keep reading to the end to find out how Paperless Pipeline is not only the best transaction management software out there, but how its transaction-based pricing model can also save you money.

The Current State of the Property Market

So how did the housing market enter a bubble in the first place? According to Freddie Mac it’s due to: 

• The lowest mortgage rates on record in 2020 and 2021.
• Limited housing supply due to underbuilding.
• More first-time homebuyers entering the housing market.
• People moving from cities to areas with an existing housing shortage.

There have also been low levels of foreclosure. Most homeowners have a comfortable amount of equity in their homes. Many mortgage lenders chose not to issue foreclosures during the pandemic. This means fewer homes have been released back into the housing market in this way. 

The housing market was booming, with the median sale price of homes reaching an all-time high of $416,000 in June of this year. Despite the recent price declines in the past months, prices are still 6.7% higher year-over-year. 

Why have home sales dropped?

Several factors have combined to push a large portion of home-seekers out of the housing market. 

• Inflation started skyrocketing towards the end of 2021, increasing the cost of living for all Americans. To combat inflation, central authorities have steadily increased interest rates.
• Mortgage rates are now sitting at their highest since the 2008 housing crash, with a drastic jump from 3.29% in January 2022, to 6.7%. This has made borrowing unaffordable or outright excluded people from borrowing money.
• High house prices are still hot from previous housing market trends and have yet to react to the affordability crisis.

In the current climate, moving homes is not affordable for several people—particularly first-time buyers who don’t have enough capital to make a large down payment.

All of these factors have led to the lowest demand for mortgages in two decades. 

Existing home sales in the U.S. fell 0.4% in August of 2022. This is the lowest reading since May 2020, and follows a 5.7% fall in July. This was the seventh month in a row that existing home sales had fallen. Year-on-year sales in the same month were 4.8 million—down from 5.99 million during the same period in 2021. 

How is this affecting the real estate business?

Fewer home sales mean less income for real estate businesses. A Deloitte study found that 48% of commercial real estate businesses surveyed expected to see a decrease in revenue in 2023. 

According to HomeLight, 89% of estate agents reported fewer bidding wars in their respective housing markets as competition for housing declines with the demand. 

They are witnessing the steady growth of inventory as properties stay in the housing market longer.

This significant drop in the public’s desire to buy new homes is affecting real estate businesses across the country, threatening many with closure if they don’t cut costs.

To counterbalance their lost revenue, titans of the industry, like Redfin and Compass, have announced workforce cuts of 8% and 10% respectively.

Many other businesses are in similar positions. They need to find ways to cut costs, but losing agents means losing what is left of a dwindling market share.

Will it Be as Bad as the Housing Market Crash of 2008?

Many experts agree that the U.S. housing market is currently experiencing a correction. While many businesses in the sector will struggle, it won’t be anywhere near as catastrophic as the 2008 housing market crash. 

Rick Sharga, VP of market intelligence at ATTOM Data Solutions says that he expects to see a decline in property prices of around 5% in some housing markets with nationwide prices remaining flat.

This is compared to the housing market crash in 2008, where some houses lost up to 50% of their value. 

One reason that today’s housing market is more robust is that homeowners have better finances. They have good credit and own lots of equity in their home. 

Spooked by the housing market crash, many lenders significantly increased their lending standards after 2008. This is one of the reasons why there have been so few foreclosures. 

Strategies to Weather the Housing Market Slump

To survive the downturn, your business needs to adapt to changes in the housing market and try out new strategies. 

This section lists some of the ways to do this.

Expand into new housing markets 

Typically, if demand cools in one housing market, it usually increases in another. So if business slows in your niche or area, start expanding your reach.

Look outside your normal geographic area, price range, and sector. Try to find places where people are still buying and selling.

Preforeclosures, expired listings, and rentals are all good examples of expansion opportunities where demand may still be high. If you help someone with these transactions then they are likely to turn to you for their next transaction.

Focus on marketing

Investing in marketing will help you catch more buyers when confidence dips. 

But with sellers nationwide still overconfident, the majority of properties in the housing market are unrealistically overpriced (despite the affordability crisis).

It’s important to be upfront with your sellers, and to tell them that selling their home is going to be more difficult if it’s still on the housing market when the recession hits. They need to be realistic about their asking price if they want a quick sale.

Maintain relationships with clients

Fostering and maintaining existing relationships is the best strategy available to realtors in a downturn.

When the housing market gets tougher, the best opportunities you will get are referrals and repeat business from clients you have already worked with.

Do not neglect these relationships in the coming months. 

Continue to reach out to past clients and focus on building relationships. There may be leads that don’t amount to anything now because clients can’t afford to move, but this doesn’t mean you shouldn’t keep channels open with them. The moment the housing market turns and they can afford to move, you’ll be the one they reach out to.

Keep up your marketing

If you need to save costs, make sure it’s not your marketing and self-promotion that suffers.

In a housing market with fewer sales, you need to stay at the forefront of customers’ minds. There will still be sales in a recession, and you need to keep your brand competitive.

Know your return on investment (ROI)

One of the best ways to save costs is to track your spending and measure the value that you get from it. 

Begin by writing down your business goals and the different steps you’ll need to take to achieve them. 

Create a budget that takes into account these steps. For example, if you are going to launch a newsletter to get leads then you’ll need to consider:

• Software costs.
• Writing and design costs.
• Cost of time spent managing email campaigns.

Calculate your ROI by dividing your predicted return by the amount you plan to invest. 

Once you have made these calculations, track your spending as you go. Log any variations in spending or expected return and check that your goal is still viable. Be sure to cut any spending that isn’t providing a good return.

Cut Costs in Your Real Estate Tech Stack

💡 What Is a Real Estate Tech Stack?

A tech stack consists of systems, tools, software, and programs. It serves as the building blocks for how you run your business.  You probably already use a combination of calling, texting, and emailing, along with a CRM.

A successful tech stack is one that makes you and your team as effective and efficient as possible. Your stack should support every aspect of your business, from lead generation and nurturing to document storage and electronic signatures. 

You need software for:

• Lead generation.
• Lead conversion and nurturing.
• Data storage and organization.
• Social media marketing.
• Email marketing.
• Transaction management.
• Reporting and monitoring.

Of course, this varies from business to business.

A Biproxi survey found that small real estate businesses (1–49 agents), spent an average of $25,000 on their tech stack annually, with similar amounts reflected in a Softermii study. 

This might seem like a lot of money but these tools are critical to your business.

But in tough economic times, it’s a good idea to audit your tech stack to see what is essential to your business, and where savings can be made.

It all comes down to what benefits your tech brings to your business, and if you are getting a return on your tech investment.

How to audit your real estate tech stack

To begin auditing your tech stack, you need to create a comprehensive list of every piece of software that your business uses or is subscribed to. 

Once compiled, evaluate each tool using this checklist:

✅ Is this tech essential to the operation of your business?

✅ Are there any parts of your tech stack that don’t integrate well with your other tech?

✅ Does the technology justify its cost?

✅ Is there any tool overlap or redundancy?

✅ Is the tech intuitive and accessible, or do you have trouble using it effectively?

✅ Do your people avoid using it or try to minimize the time they spend with it?

Going through this checklist should help you weed out parts of your tech stack that you don’t need or that you could replace with better software.

Optimize your CRM

In today’s real estate sector, setting up your customer relationship management (CRM) tool to keep track of your prospects, clients, and leads is critical. 

Focus your marketing on people who will need your services in the future. This keeps your business healthy by providing you with a sustainable pipeline of future deals. 

Explore alternative CRMs

Some CRMs can be incredibly expensive to run considering how many agents you have subscribed. 

It’s therefore worth seeing if you could get better value for money from another CRM or alternative tools.

Some popular options include:

• HubSpot: Great customization options and a scalable free option for brand new real estate agents.
• Insightly: An efficient CRM that offers detailed analytics.
• IXACT Contact: Provides excellent marketing tools and integration. Excellent for campaign automation. 

Another example of tech that real estate businesses can cut costs on is their accounting tech. There are several accounting software options that are designed specifically for real estate but cost a significant amount.

Check out Xero and Quickbooks for less costly alternatives.

Are you paying for features you don’t use? 

As mentioned earlier, you may want to check for redundancy in your tech stack. This ensures you get value from the software you pay for.

But you could also see if your tech stack has valuable features that you aren’t using.

Make a thorough audit of your CRM and MLS in particular, as these tools usually have additional features.

For instance, are you subscribed to HubSpot and an email template tool? HubSpot features an email template designer, so you could unsubscribe from the other software.

Be wary of software that tries to be a jack of all trades—tools designed for a specific purpose are often cheaper, more effective, and user-friendly. 

Use software with adjustable pricing

The housing market is taking a hit. There are fewer buyers and fewer transactions to go around.

If the same number of agents make fewer transactions, but you pay the same for their tech, you’re getting poor value for money.

The National Association of Realtors (NAR) did a study on how much each real estate agent spends on average per month on their tech stack.

The majority spent $50–$250 on average. This doesn’t sound like much, but if you have 50 agents working at your brokerage then it becomes expensive. 

The problem is most subscriptions are based on the number of people using them.

So how can you justify paying subscriptions for agents that are generating less revenue?

One option is to start laying off agents or unsubscribing them from parts of your tech stack, but these aren’t efficient options, because:

1. Fewer agents means fewer people generating leads in an already tight housing market, which reduces your market share potential.
2. When “unproductive” agents do finally make a transaction, they don’t have access to your tech stack.

When auditing your tech stack, it’s useful to consider tools that offer a per-transaction pricing model.

Why?

Because during goods times, when you close lots of sales, you can afford to pay for a higher number of transactions. 

But in the coming housing market chill, as transactions and income decrease, so too will your subscription costs. 

Tools that offer this pricing arrangement are essentially saying they’ll be with you through the good times and the bad.

Save Costs with Paperless Pipeline 

No matter how the housing market or your sales are doing, Paperless Pipeline has some great reasons why our software should be a part of your tech stack.

Transaction-based pricing model

Whether you are making hundreds of sales per month, or things have gotten a little slow, our pricing will adjust to the number of transactions you’re making each month.

Have a look at our prices below:

What’s more, you can have an unlimited amount of users, meaning no matter how many agents are actually making sales, all of them will always have access to your transaction management system.

Work more efficiently

Paperless Pipeline allows you to spend less time on admin tasks. This means more time for generating leads and selling properties—which results in increased revenue for your business.

Our intuitive, distraction-free interface allows your admins to work faster and more efficiently by streamlining the transaction management process.

Avoid deals falling through

If a deal falls though due to a missed deadline then it’s a disaster. You’ve wasted tons of time, missed out on revenue and probably lost a client. 

Paperless Pipeline stops you from losing revenue in this way by ensuring every transaction is managed meticulously. 

• You’ll know exactly where every deal is at anytime. From one page, you can instantly see what’s active, what tasks remain incomplete or overdue, and what’s closing.
• Daily reports inform your team of current due dates, what’s scheduled for the future, and what may be overdue.
• Automatic reminders prepare your team for important transaction milestones like closings and expiring listings.
• Monthly production reports keep your admins and agents updated on their progress.

How Paperless Pipeline Beats the Competition

Paperless Pipeline is cheaper, more flexible and easier to use than its competitors.

Let’s look at how it compares to Dotloop and Skyslope.

Pricing

Paperless Pipeline starts at just £120 per month. Skyslope and Dotloop prices both start at $299 per month—but it might be more depending on the number of agents you have. You pay this whether business is good or bad. 

Setup and training

We offer free training and setup. Dotloop charges a $600 setup fee, while Skyslope charges $500 for training. 

Flexible contracts

We don’t believe in locking you in to contracts or limiting what you can do with your data. That’s why you’re free to cancel whenever you like. 

Try Paperless Pipeline for Free Today

The next year is likely to be difficult for real estate businesses. Saving money on your tech stack is one way to help your business survive this period.

Paperless Pipeline transaction management software can help you do this. 

Find out how we can help you today. We offer a completely free trial so you can see for yourself how much money we can save you. There’s no credit card required and no obligation to buy. 

Paperless Pipeline offers:

✔️Clear upfront pricing.

✔️Unlimited free users.

✔️No annual contracts. 

✔️Cancel any time.

✔️Keep your data. 

✔️Free setup.

✔️Free training.

✔️Free support.