The sky is falling, at least according to the financial press. Home sales are down from year ago levels for the first time in 11 years, and the sixth time in 38 years. Will that sideline buyers? Not if you put them back into the game.
You can't blame buyers and sellers for being nervous. Sales of existing homes have fallen five consecutive months and fell 0.5 percent in August to a seasonally adjusted annual rate of 6.30 million, says the NAR. Sales are down 12.6 percent in the past year, the slowest pace since January 2004. The median price of existing homes fell 1.7 percent from last year in August, the first time since April 1995 that median prices have fallen on a year-over-year basis; further, it's the second largest decline since the NAR began tracking sales in 1968.
Home inventories have also risen, causing a buyer's market of 7.5 months inventory on hand and imposing a significant psychological barrier. A balanced market is considered to be 6 months of inventory on hand.
Your inventories may be rising, too. Homes are still selling, but not as quickly as they did. Depending on where you live and how your brokerage operates, there may be a lot of things you can do to improve your chances of selling homes in a buyer's market by better serving buyers:
Educate sellers. As Chief Economist David Lereah of the National Association of Realtors says, sellers are getting the message that the nation is moving into a buyer's market. They know they have to lower their prices, make repairs, and do updates, but many are still resisting. If prices are dropping, comparables from 2005 simply don't matter anymore, no more than they would matter if prices were going up. What matters is what home buyers are willing to pay today. This isn't the time to "try it at this price" or "lower the price later."
Lower prices won't do it alone. Market Conditions reports from all over the country suggest that buyers aren't out looking. Open houses aren't being attended. Classified ads aren't bringing in calls. That suggests that buyers are waiting for prices to fall significantly before jumping back in the game. That means you have to shift your efforts as an agent to drawing buyers in to see those homes, just as sales draw in end-of-season car and apparel buyers. Offer incentives to buyers to get them to come, such as free consultations with a lender if they attend your open house. Acknowledge in your advertising that now's a great time to buy.
Reverse the buyer fear factor. As an agent you have to overcome the fear factor by showing any buyers you have how to buy in a catch-a-falling knife market. The way to do that is through education. Plan a buyer's workshop or seminar that targets first-time homebuyers, aspiring investor-landlords, or vacation-home buyers.
Add property management to your business. In 2004 and 2005, one-third of the homes sold were to non-occupying home buyers. This suggests that a lot of people might need or come to need property management services. Add rentals, property management services, rental/sales make-ready to the list of things you do for buyers and sellers, so you can continue to profit from homes that aren't selling.
Become a rental agent. If you sold a $100,000 home, after sharing commissions you might make $1,500, more or less. If you rented the same home, you'd make $1,000, but you'd be able to make $1,000 again next year. Consider rentals as the annuities of real estate.
Learn to love the homes you have to sell. There's a good reason why ranch homes are ubiquitous. Everyone likes them and with nearly all load-bearing walls on the outside, they're terrifically inexpensive to update. Carry a scrapbook with you of before-after pictures of houses you run across to show buyers with little imagination what they could do to improve an older home.
Develop a niche. Foreclosures, historical homes, multi-family, and luxury are all great areas to create a name for yourself and a constant stream of business because you are the expert in that area.
Published: September 26, 2006
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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment.
Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's.
Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.
Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans.
Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR
"The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors
Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment.
