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By Leon Y. d’Ancona, B.T.L., M.T.L., RRESI
Making the most out of adverse conditions has always been a business challenge. The good news for real estate professionals is that now more than ever in a declining market homebuyers and sellers need a savvy agent who can give them documented expert advice.The real estate prophets of doom and gloom are quoting statistics that the market is down. There appears to be a masochistic tendency to predict how much the home prices will continue to erode and how the market will continue to decline. Figures as high as a 45% decline are not uncommon.
Research shows that in 120 major markets through 2007, the number of sales declined substantially. Many markets throughout the United States look like the graph below, where sales went from a high of 5,905 homes sold in March 2007 to 3,430 in December 2007, a decline of 42%, which is partly seasonal.
The bright side for real estate professionals is that they’re left with 6,860 opportunities to make an average $8,500 gross commission, and sellers that in traditionally the poorest sales month saw more than 3,000 homes sold. How can you turn adversity into opportunity?
Here is some advice for real estate professionals on how to be top performers in a down market.
- Know your market share. Look at the chart below. If your market share was just 1/10 of 1 percent in the worst month of the year, your gross commission income is still over 1 million dollars, or 12 million dollars per year and that would likely earn you well over $350,000 Most would be happy earning half that. So, a market share of 5/100 of 1 percent would earn a gross commission income of 6 million dollars. That is quite a respectable earning in a slow market.
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Decide the area and price range you will solicit listings in. This will cut back on driving time and will increase time spent on selling. Our research shows that many real estate professionals are not properly equipped to take all kinds of listings. In most MLS, there are about 26% more agents who spend most of their time with buyers. Your income really depends on the buyers’ whim, as buyers decide the price they want to spend and the neighborhood they want to live in. When you are a listing agent, you have control of the type of home, area, ethnicity, etc. that you decide on.
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Be the most informed agent. Prospective clients have thousands of agents to pick from, so stand out. Be the most knowledgeable about the marketplace. An informed agent studies market trends in order to counsel clients. She knows that the seller cares only if the home sells quickly and for the highest valuation. She is able to walk away from clients whose expectations are not realistic, and leaves the door open to working with clients who failed with their “other choice agent”.
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Understand your marketplace to competitively market listings. In most businesses, different types of inventory play a major role in deciding price and availability. In every MLS, inventory can be broken down into three types of homes each requiring different marketing approaches: Starters, move-up and luxury homes. Successful real estate professionals understand that each type of home is a real estate market unto itself, commanding different prices and requiring different marketing. By knowing the price ranges of each category, its inventory and locations, you have information that eludes most of your competition and makes you a winner if used correctly.
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Spend time and effort in areas that are moving best. Common sense dictates that you know which segment of the market is moving best and that you dedicate your efforts towards that faster turnover segment.
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Continue marketing in the slower moving price ranges. Use email to update prospective clients on market conditions. This will put your name in the forefront when monthly email recipients decide they want to sell or purchase. This method is highly effective, and takes less than two hours a month, at no cost to you.
Don’t let the real estate prophets of doom and gloom keep you from being a top performer. While the market has slowed down, it has not stopped; your prospective clients still need a place to live. Finding an expert to guide them through the home buying experience is as welcome to them, as the commission is to you.
In this downturn market, sellers now recognize the absolute value and expertise a professional like you brings to the table. Your prime challenge should be to portray yourself as the person to do business with. You do that by knowing your market better than your peers. Understanding and evaluating real estate statistics can make you thrive in a challenged marketplace.
In this downturn market, sellers now recognize the absolute value and expertise a professional like you brings to the table. Your prime challenge should be to portray yourself as the person to do business with. You do that by knowing your market better than your peers. Understanding and evaluating real estate statistics can make you thrive in a challenged marketplace.
All articles presented on this site and statistics provided by REality™ are copyrighted www.realestatestatistics.com. For more information or to enquire about using the articles and data presented, contact leon@realestatestatistics.com.
