Looking back on 2023

A reporter reached out to me from Inman News to inquire about what 2023 was like for small brokers operating in 2023. The following was a summary of my experience.

What's unique/rewarding about being a small broker?

• It's fun to make your own decisions, create your own vision, and design your own branding and signage.? Freedom.
• There is a lot of pride in having your name on something you built, no matter how small.
• No corporate approvals, red tape, mandatory meetings, or nickel and dime fees
• Family values/atmosphere... industry conversation over lunch.
• No distractions/politics from one hundred other agents.? You choose who you surround yourself with.
• Lower overhead/better economics means the extra dollars can be directed where you see fit.
• It's a unique opportunity to surround yourself with only those of your choosing who embody your high standards and professionalism.??

Challenges:

• Hard to know if you didn’t get a listing call because you aren’t a big national brokerage. We have only ever been a small family brokerage so don’t know what we might be missing. We are fine with that.?
• The extra work of book keeping/legal/operations/paperwork required on top of being a full time broker in the field. It's not that bad when you keep it small.
• It is challenging for a small boutique broker who is in the field full time to handle all the oversight/recruiting/training/advising that would be required to have 5-50 agents.? That's why we chose the small “teamerage” concept.? In our eyes a sustainable brokerage needs to be pretty small or really big, it's very challenging to operate in the middle.?

2023 was challenging in the following ways

Both sellers and buyers felt like the rug had been pulled out from under them.??

• Buyers with their runaway payment.??
• Sellers often underwhelmed with the buyer demand they experienced not matching the crazy stories they had heard over the previous years.

2023

Surprisingly our 2023 GCI numbers were better than 2022, yet it didn’t feel like it.? 23’ felt more taxing than the previous year.? It felt low volume. It felt crowded with agents. It felt like there was more buyer/seller friction than years past and extra concessions and counseling to get to the finish line.? The first half of 23’ felt a little easier than the last half. As rates increased, more buyers and sellers took to the sidelines starting mid year.? At the end of 2023 buyers and sellers seemed fatigued, distracted by headlines, and we witnessed heavier seasonality than the past few years.?

Buyer Challenges

The higher rates rose, the more many move up buyers decided to stay put.? We watched many buyers who wanted to buy, bow out.? Buyers that may have started looking in 22’ or early 23’ continued to backoff and be less enthusiastic as they watched their payment increase.

Some buyers that still were able to purchase started to wonder if high rates would lead to a correction, causing them to hold off, wondering if they would be buying at the top.?

The good news is many of these buyers still want to be buyers at some point and the pent up demand will release when they find rates tolerable.

Seller Challenges

• Most sellers are also buyers, and most decided to stay put.

• Sellers' high expectations didn’t match the buyer demand.? Some sellers had trouble understanding that the current market wasn’t yielding dozens of crazy buyers fighting to buy their property.??

Our Transactions came from these buyer demographics in 2023

Move up buyers that had these elements in common:

• They had high equity/low mortgage balance in their current home which helped soften interest rate comparison and helped reduce their new payment.

• They often owned their home for more than 10 years, often purchased before marriage.

• They were living below their means.? They experienced 2-3 times greater household income than when they may have originally purchased.

• They sought a higher standard of living, wanted a better neighborhood, a larger home that better suited their growing family, and home office needs.

First time homebuyers that often had parental down payment help which lowered their payment and wanted to escape high rent apartment living.

Downsizers that owned their home for over 20 years who sought a one story living option or to move away closer to grandchildren.

2024

• I expect at least 10-15% more transaction volume.?
• Less part time agent competition.
• Transactions concentrated in late Summer/Fall as rates head into the 5%s.
• Overall higher consumer confidence.