Welcome to increased competition.
Improving markets are great, but this also means higher agent retention. New licensees will enter the market, and some agent who left it will return. Homebuilders will draw more walk-in traffic, and sellers will start insulting you again for daring to suggest such a low price.
"In 2011, the housing environment, or the supply-demand balance, favored buyers," said Walter Molony, a spokesman for the National Association of Realtors. "Early this year it transitioned into a balanced market. Now it is beginning to favor sellers in some areas, especially in much of the West and parts of Florida."
Great news for the industry, but not for agents who don’t respond to the changing environment.
"It is the tightest since March 2006," Molony said.
The question is, what should you do about it? I have an idea, but I don’t have NAR’s global perspective. So I asked Molony what he thought agents should do. I am glad I did.
"In a lower-inventory environment you must know what is going on in the market, including new homes and FSBOs," he said. ("FSBO" is industry jargon for "for sale by owner" — homes marketed without a Realtor’s assistance.)
How should agents go about doing this?
"Look at what buyer’s agents do. Buyer’s agents tend to specialize in neighborhoods or certain geographic areas, and keep an eye on everything that might be of interest to potential clients, including new homes and FSBOs."
The fact is, agents need to focus on improving their prospect-to-sales ratio. Trainers need to help them focus on what is important today to do that — knowing the inventory.
Unfortunately, most training does not include new homes. Maybe it’s time to take another look at this practice. According to NAR surveys, 16 percent of all homes sold in 2012 were new, up from 15 percent in 2011.
I came to believe this as I rummaged through NAR’s Profile of Home Buyers and Sellers 2012, a 115-page analysis of what 2012 homebuyers said about issues that are important to NAR and its members.
This study is based on 8,501 responses to a random sample of 93,502 recent homebuyers.
NAR is projecting 4.64 million resales in 2012, compared with 4.26 million in 2011, and 371,000 new homes sold in 2012, up from 301,000 in 2011.
The housing market pie is tasting better but it’s still small, and the slices could get thinner. This is no time to get comfortable.
I found the table below to be of particular interest, as it applies to action you can take today. Customize the numbers to your market. It will help you get more sales and listings because with this table, you prove you know your market.
Price of home purchased, new and previously owned homes
| Price Range | Among all buyers | Among buyers purchasing a new home | Among buyers purchasing a resale |
| Less than $75,000 |
8%
|
1%
|
9%
|
| $75.000 to $99,999 |
8%
|
1%
|
9%
|
| $100,000 to $124,999 |
9%
|
5%
|
10%
|
| $125,000 to $149,999 |
10%
|
7%
|
10%
|
| $150,000 to $174,999 |
10%
|
12%
|
10%
|
| $175,000 to $199,999 |
8%
|
10%
|
8%
|
| $200,000 to $249,999 |
14%
|
21%
|
13%
|
| $250,000 to $299,999 |
9%
|
15%
|
8%
|
| $300,000 to $349,999 |
7%
|
9%
|
6%
|
| $350,000 TO 399,999 |
5%
|
5%
|
4%
|
| $400,000 to $499,999 |
5%
|
6%
|
5%
|
| $500,000 or more |
8%
|
8%
|
7%
|
| Median Price |
$189,700
|
$232,000
|
$179,900
|
Source: "Profile of Home Buyers and Selllers 2012," National Association of Realtors.
What this table says:
Among all buyers who purchased a home, 14 percent paid between $200,000 and $249,999. Among those purchasing a new home, 21 percent paid that amount. Only 13 percent of buyers purchasing a resale paid between $200,000 and $249,999.
Replace these numbers with numbers from your market, and use it to prove your knowledge to both buyers and sellers.
If you understand the percentages in your market, you will understand your market, except for FSBOs, which you can easily track for the most part by riding the neighborhood. Molony confirmed that "new homes" were not considered FSBOs for purposes of this study.
This means that you should never lose a sale because you could not find a home in the buyer’s price range UNLESS you did not show new homes or FSBOs in the buyer’s price range.
And in today’s market or any market for that matter, you cannot afford to lose one sale because you did not know or show the right inventory. Knowing your market and being able to prove you do, above MLS data, is one fact that separates top agents from the others.
The table becomes a qualifying tool for buyers, because you will get comments about "new homes." You may discover an issue that needs your attention, like the fact they have preregistered on the Internet with a homebuilder, something you might not have learned without this tool.
It is a great listing tool, because you (and only you) can prove that you understand the new homes market and the competition it represents in the sellers’ price range.
With this table, you not only position yourself as market-knowledgeable, but one who goes the extra mile to help your clients understand the market. Therefore, your buyer prospects are less likely to put off a buying decision, which makes you a better agent. Right?
Here some ideas to help you get started:
1. Customize the above table to reflect your market.
2. Start qualifying for new homes if you are not now doing so.
3. Google "new homes" and your market’s ZIP codes to see how easy it is.
4. Ask your local homebuilders if they have an Internet adviser. If they do, call the adviser and find out what their services are. Some are offering to make your appointments!
5. Visit at least two new homes communities on the east, west, south and north sides of your office.
6. Develop relationships with the on-site agents who will keep you updated on marketing and important location benefits (new roads,a YMCA under construction, and prospect attitudes who visit their sales office.
7. Attend builder opens. Ask the on-site agent to give you a "location" presentation at the site table.
8. Ask the on-site agent to introduce you to their top-selling co-broker. Ask the co-broker why they like this particular builder and location.
9. Take a buyer broker to lunch. Are they successful because they are great closers? No. They are successful because they are constantly looking for something to sell to their clients, and therefore now the market. Test me on this.
10. Face your fears about finding new homes, registering your prospects, and being paid your commission. Those days are long gone, otherwise an average of 60-70 percent of all new homes sold are sold by real estate agents, according to new homes industry sources.
There is much to learn, but in this market, I can think of nothing that will help you grow your business and confidence faster than truly understanding the inventory available in your market.
As we all know, luck happens when preparation meets opportunity. Opportunity is finally knocking. Hopefully, you are preparing to open the door.
Your comments?
