Looking for ways to cut costs?

Reducing the amount of office space is a logical step for many real estate businesses, according to Bob Albanese, vice president of strategic services for Better Homes and Gardens Real Estate LLC.

Albanese, who recently spoke at the RIS Media Convention in New York City, said a company with a 5,000 square foot office requires approximately 24 to 28 percent of the company’s costs to maintain the space. “By reducing that space to 3,000 square feet, the costs are reduced to 12 to 16 percent of the company’s expenses. If the space is reduced to 1,500 sq. ft, the costs are down to seven to nine percent of the company’s costs,” he said. “For many companies by making this change it could represent a positive rate of return (ROR).”

Albanese also suggested:

• Consider renegotiating your lease. “Now’s a prime time to do so because there’s plenty of commercial space available,” he said. “Or sublet a portion of the office space you’re already using.”
• Perform a risk assessment of your real estate business. If you make changes, who will it affect?
• Bolster support for agents working from home.
• Revise your strategic plan to reflect changes you’ve made. Create a new vision around the new office plan.

“The objections we hear are that agents or consumers won’t like it if we change the office but that’s often not the case,” Albanese said.

Georgianna Findlay Finn, co-owner of Coach REALTORS® in New York, said her company has cut all classified advertising across the entire company. She said communicating with the entire company was crucial to meeting the challenge of these changes.

A 38-year real estate veteran, Finn said, “Our company’s whole culture has changed. Our message was ‘we will bring your through this.’ And we’ve never changed the company’s goal, only the methods of reaching our goal.”

Education is an area where the company has not cut costs because she believes this is an investment in the agents’ growth. “We are driving business by coaching each agent to production,” she said. “We began training our agents on how to represent buyers and within 60 days we had more Accredited Buyer’s Representatives (ABRs) than any other company on Long Island.”