Source: realestatenewsline.com, Mary Weaver, Sente Mortgage
realestatenewsline.com (April 15, 2013) – If you were involved in real estate in San Antonio back in 2005/2006, you may remember what it was like to do business with inventory levels similar to what they are today. Certainly it’s a far cry from the buyer’s market of just two years ago. And, if you are working in a popular part of town, you are likely seeing an even more dramatic seller’s market, with multiple offers, higher prices, and quicker sales.
We work with agents in several markets across the state, including markets where the inventory is now three months or less. What’s interesting about this current seller’s market is that it has developed relatively quickly. For your buyers who don’t keep up with real estate news, it is possible that they are still expecting to be able to pick and choose and take their time about making a new home selection.
So what’s the right strategy for this market? I’ve been talking to agents in these seller’s markets at our Build Your Business Seminars, and they have told me that there are four keys to making it work:
- Set clear expectations. I hear this from every agent in our tightest seller’s markets. Many of their buyers aren’t prepared for having to make quick decisions, offering more than the listing price, and competing for a property. Last time they really paid attention to the news about real estate, they were hearing about foreclosures and people who couldn’t sell. You will need to be sure you are crystal clear with your buyers about what they can expect, especially those trying to buy in a neighborhood where demand is high. One of the most effective ways of making sure they understand what is happening is to have stories of buyers who didn’t prepare and what happened as a result.
- Sharpen your negotiating skills. The obvious part of this is being able to negotiate with the seller’s agent. Even in situations where yours is the only offer, they may decline to act on requested repairs or hold out for a “better offer” if they think one is around the corner. But you also need to be able to “negotiate” with your own client. Helping them to understand the consequences of a low offer, dealing with their disappointment if they aren’t the winning bid, and convincing them that delay isn’t an option are all skills you will need. One approach is to use partnership language, where they understand that both of you have a responsibility. They are responsible for the decision; you are responsible for acting on that decision.
- Tap your network of seller agents. One consequence of past seller’s markets is the pocket listing—homes for sale that never quite make it to the MLS. If you don’t have a great network of seller agents, now is the time to create one. Keeping them posted about the type and location of home you are looking for can help them help you. At the very least, they can let you know when a new resale is about to list, so you can be one of the first to visit.
- Think outside the resale. You need to know the market better than ever. And when you have a client who just doesn’t fit (looking for something unlikely to be found, uncomfortable with the multiple offer process, not sure they like the idea of “guessing” at the offer), have other alternatives at hand. One is to make sure you know the builders in the area and what they offer. Another is to look at remodels, using a program like the 203k to roll the cost of remodeling into the loan.
Finally, you may have to get comfortable with dealing with FSBO (For Sale By Owner) properties, including the conversation with your buyer about their payment of your commission. All of these practices—setting expectations, sharpening skills, networking, and keeping track of all market opportunities—are best practices in any market. But in the current seller’s market, they become even more important as you work with your buyers. Oh, and as the first step, don’t forget to be sure the buyer is financially qualified so you don’t waste your time and effort on properties that are not possibilities.