In our previous two posts, we covered both the mindset necessary to prepare for the next shift in real estate (read the part 1 POST), as well as the first 6 tactics to not only survive, but thrive in the upcoming real estate shift (read part 2 of that POST). Today we are going to cover the final 6 tactics to get you through the coming real estate shift in the market. Let’s jump in right where we left off with tactic #7:
7) Price Ahead Of The Market- Seller Pricing Strategies
In Shift: How Top Real Estate Agents Tackle Tough Times, Gary Keller states that as soon as the media declares a shift in the real estate market, buyers tend to become overly cautious, sometimes overlooking great opportunities in search of a steal; sellers who are slow to recognize this shift will quickly become overpriced, and thus, overlooked. What a shift does is expose the age-old real estate price conflict between what a seller wants versus the price a buyer is willing to pay. During a shift, our sellers need to be aware of the concept of “window of opportunity.” When a home first comes on the market, it will attract the attention of motivated buyers, or agents who believe the price is worth the effort of finding those motivated buyers. The first time someone sees the house is called the window of opportunity, simply because it is the best time to sell the house. The home must be priced right from the beginning in order to capitalize on this important timing. You need to understand that pricing at the market in a shift, is in essence overpricing the home. In a shift, agents must absolutely become masters of pricing the home correctly, and also must become experts in helping their sellers understand and trust their market data. The last thing you want to do in any market, especially a shift, is chase the market down by being behind on pricing. As Keller states, the best advice you can tell your sellers is “We are in a race against time. The best price you will get, is the one you get now. If you wait, it will just be lower.”
8) Stand Out From The Competition- Seller Staging Strategies
Very few people have the imagination to visualize beyond what they see, according to Keller. The best sellers realize this and do what is necessary to showcase the home in its best possible light. Price must match the condition of the home, period. It is not a matter of should the seller stage, as every home should be staged. The better question is how should we stage? A recent study shows that staged homes, on average sold in half the time of non-staged homes, and they sold for 6.3% more as well. A great approach to help sellers get on board for staging is to have before and after pictures of cluttered, homes that were not staged, and then after staging. Simply show the photos to the seller and ask them which home would do a better job catching the buyer’s attention. Of course, they should pick the staged photos, at which point you can explain they have chosen the staged rooms, and can guide them in to staging their home as well.
9) Create Urgency- Overcoming Buyer Reluctance
In Shift, Gary Keller notes the great irony of a buyers’ market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The biggest myth of a shift for buyers is their belief that they can time the market. They lose focus as to why they are buying in the first place (different neighborhood or school district, more space, etc). Keller goes on to say there are 3 things you will want to determine when deciding to work with a buyer: 1) Their ability to buy 2) Their readiness to buy 3) Their willingness to buy. Their willingness to buy is tied in with their urgency. You want to know that they are not wasting your time, waiting for the “perfect bottom.” Stay on top of your buyers until they have actually settled on the home. You want to make sure you don’t take your willing buyer for granted. You will want to head off any issues as soon as they arise, or sooner, in some cases. By helping a buyer discover their “why,” by being the local economist of choice, and by addressing buyer reluctance issues, you will be able to energize the urgency of your buyer.
10) Expand The Options- Creative Financing
Keller further goes on to state “In a shift, finding creative ways to help buyers afford to buy and sellers afford to sell, or buying and selling will slow down to a crawl.” As an agent, you must become very strategic as well as competitive in order to find creative solutions for your clients in order to get a deal to work. You must understand 3 factors in order to have creative finance work: 1) You will have to be clear as to what buyers, sellers, and lenders want. 2) You will need to be well versed in what each of them can do creatively to put a sale together. 3) You will need to be creative in making all this work at one time. Here is just a brief list of creative financing ideas. Make sure you read this chapter in Shift to understand the complete list:
- seller contributions
- owner financing
- seller second
- gift funding
- pledged asset mortgage
- non-occupant co-borrowers
- lender-funded buy down
- state and local grant programs
- private lending
11) Master The Market Of The Moment-Short Sales, Foreclosures, and REO’s
According to Keller, we are uniquely positioned in a downward shift to help both borrower and lender work out their problems, either together, or separately. There are 3 markets that show up in a shift: 1) Short Sales- individuals and families trying to avoid foreclosure. 2) Foreclosures- bargain hunters and investors looking for bargains. 3) REO’s financial institutions with an above average amount of foreclosed homes to sell. When dealing with homes in default, you will need to be both organized, as well as persistent. Become an expert in these niches and you will be able to generate a tremendous amount of leads and referrals, and potentially receive groups of listings at one time. As we get closer to the shift, we will break down each of these categories in more detail, as well as resources to become the leading expert in your market place.
12) Bulletproof The Transaction- Issues and Solutions
While real estate transactions in general aren’t completely trouble-free, when a shift happens few transactions are easy, and most closings have some type of challenge, according to Keller. In a shift, you not only need to be a master of the transaction, but you need to master the skill set of being a salesperson as well. In fact, if you are a student of Mike Ferry, he believes that we are all sales professionals first (or at least we should be). You need to over prepare yourself and be ready for anything that comes up. By doing so, you will not only be able to handle problems that arise, you will be able to anticipate problems before they arise, and head them off. Your biggest focus points in a shift need to be proactive prevention and early response to issues. There are 6 key areas where issues are likely to arise:
- inspections and repairs
- appraisals
- loan approval and funding
- other contingencies
- co-op agent
- deadlines
In future posts, we can break down these areas individually and go through some of the challenges as well as remedies to work through them. As you can see from this series of posts over the last 3 weeks, Shift: How Top Real Estate Agents Tackle Tough Times, truly is a wealth of information and should be your go-to resource when the market changes gears on us. Do yourself a favor, click on the link above, and buy yourself a copy to keep on your desk as a reference. You will thank yourself for many real estate cycles to come.