Editor’s note: In this four-part series, Inman News examines the effect of the housing slowdown on everyday real estate business. We’ve asked brokers and agents what they are doing differently with marketing now that listing times are longer, how they are keeping an edge, and how a slowdown may or may not be impacting commission rates. (Read Part 2, Part 3 and Part 4.)
Marketing homes may have been a breeze in some quick-sell markets during the real estate boom, but agents in slowing markets say it now can take more time and work to close deals. Properties must look pristine and be priced well to sell, they say, and sellers should cater to buyers if they want more bites.
Home-price appreciation is slowing in much of the country and even reversing in some formerly hot markets, sales have fallen off dramatically, and inventory is building up. Though a slowing market has historically been a time of higher marketing expenses for real estate professionals, agents say they are curbing costs these days by shifting their spending to online sources.
Online marketing is especially attractive because it’s cheaper than print sources and it’s easy to track what works and what doesn’t work, said Steve Cohen, a Realtor for Keller Williams Realty in Boston.
“The expenditures connected to online resources are returning far greater money to the bottom line than conventional print ads,” he said.
“We gauge where our leads come from. I have a position on my own personal team exclusively for listings and lead coordination. We are therefore able to determine not only which sources generate leads but which sources generate quality leads and the patterning is significant and the trend is clear.”
While clients in some cases are still asking for their properties to appear in print ads, Cohen said online marketing can produce more bang for the buck.
Cohen views the market slowdown as an opportunity for experienced agents. “A slow market is a time when brokers … can capture more market share,” he said, even if there is an overall decline in transactions. “There is a winnowing out of agents who simply do not want to play the game at that level.”
Tamara Dawn, a real estate broker in Sacramento, Calif., said there is a lot of uncertainty and apprehension among buyers about market conditions. “A lot of people are just in limbo. My mentor used to tell me that the competition was inertia.” A lot of headlines seem to suggest that the “sky is falling” for the real estate market, she said.
Dawn said she spends very little money on print advertising — that was a decision she made about three years ago and she has since continued to expand her Internet marketing presence. She pays for advertising at Realtor.com and has increased her marketing expenditures at the site.
Dawn focuses on posting virtual tours and numerous photos for her property listings at Realtor.com in an effort to reach a larger audience of buyers, and she monitors Web statistics on her marketing campaigns at the property-search site.
She pays for a third-party company to capture imagery for virtual tours while snapping her own digital images of homes.
“I do a lot of staging of properties. I buy a lot of my own furniture and accessories,” she said. As homes are now sitting on the market longer, Dawn said that she has purchased a larger personal inventory of furnishings. It’s more important these days to stage homes, as there are more homes on the market competing for the same prospective buyer.
“Before, people got caught up in the frenzy — ‘If I don’t get this one the next one will be more expensive.’ People weren’t looking at the same degree (of detail). They were overlooking flaws,” she said. Nowadays, homes have “got to be pretty stunning. It’s like a job interview. (Staging) is incredibly important.”
It’s better to list a home at the best possible price upfront, she said, rather than starting higher and dropping the price down when the home isn’t selling. Also, Dawn said she encourages sellers to take care of inspections ahead of time to attract a larger audience of buyers. Buyers today are “like a deer caught in headlights,” she said, and if the seller can ease these tensions then all the better.
While Dawn, a real estate professional since 1980, traditionally works with more buyers than sellers, she said the ratio of buyers to sellers that she works with has changed from 6-to-1 to 2-to-1 as the market has changed — the rising inventory means a lot of sellers and not as many buyers. As sales get leaner, Dawn said she can rely on business from past clients.
The changing market has led Kim Parry, an agent for Zephyr Real Estate in San Francisco, to change the way she handles offers when working with a seller. Multiple offers were common in a slow market, so she would set offer dates “in order to level the playing field amongst buyers,” though now she accepts offers as they come for most properties.
Parry said she spends more money now to market her listings “so I can attract the most interest in both the property and to market myself for future business.” She said she spends more on both Internet and print ads than she has in the past. Since last year she has purchased a custom Web site for each of her property listings, and for several listings she has placed photo ads in the San Francisco Chronicle newspaper instead of a standard three-line text ad.
She uses a spreadsheet program to keep track of where her marketing money is spent. “So far, I am pleased with the ratio of where money is spent versus where I am getting my business. I am exploring seriously using the Internet for lead generation, but I am not convinced that the high prices that are being charged are worth it,” she said.
The slow market also has made sellers more flexible in paying closing costs or negotiating for repairs, Parry noted.
Nate Sumner, an agent and broker for Pacific Union GMAC Real Estate in Marin County, Calif., said that he works to educate his clients about market realities and the rising power of Internet marketing.
“I’ve been emphasizing to sellers that property marketing will require considerably longer (time) than in recent years. For me, this necessitates an emphasis on educating my clients about the current new realities in which effective Internet marketing has gained much more power than only a couple of years ago. So I’m preparing my clients for a significant decrease in print advertising and a reliance on an enhanced Internet presence,” he said.
While he devotes most of his resources to Internet marketing, Sumner said he still uses print ads to advertise open-house events. “Because of the shift away from print that I am urging on my seller clients, I’m actually spending less money now than during the hot market,” he said.
Sumner has developed an index, called the Marin Market Heat Index, that describes local real estate market conditions, and he said this index has been useful in educating sellers about market realities.
In listing presentations, Sumner said he makes it clear that owners have an “essential role in the marketing of their home,” and that owners should prepare and stage the property and price the home “appropriately, even aggressively, for current market conditions. In a slower market with a much larger inventory of listings, it is a waste of both the owner’s and my efforts for me to take a listing where the owner hasn’t agreed to realistic terms.”
Barbara Andrews, a Realtor for Century 21 Award in San Diego, who works on an agent team with Realtor Bryan Chew, said her spending on marketing is about the same now as it was during the hot market, “but we are spending it differently. We are spending it on Internet exposure.”
Over the past few years Andrews said she has advertised in The Wall Street Journal and San Diego Union Tribune, as well as in supermarket movie guides, area maps and neighborhood mailings, without much success. “Over the past year and a half I have been phasing in a change in marketing to decrease print advertising and increase Internet advertising, implementing changes as existing accounts come up for renewal,” she said.
After experimenting with referral-based Internet advertising through a major Internet company, Andrews said that she discontinued that practice.
In the current slow market, Andrews said that she and Chew emphasize to sellers how “critical it is to price their homes competitively. We let them know up front that we won’t be doing a lot of print ads because they aren’t working. We don’t want sellers to have unrealistic expectations.” When the market was booming, sellers had more pricing flexibility because homes were selling much faster, she said.
Some brokers are shifting gears, too, during the slowing market. Officials in charge of Cendant Corp.’s real estate division, now an independent company called Realogy, announced earlier this year that they sought to cut about $50 million in costs through consolidation and staff reductions at company-owned offices.
The licensed real estate agent population typically shrinks during market downturns and at the same time large brokerage companies seek acquisitions more aggressively. Brokerage executives may also exploit the slowing market as an opportunity to recruit agents from other companies.
Commenting in the Inman News blog, an anonymous commenter stated, “The smart companies have already begun to dig deep and make cutbacks. The ones that haven’t are in trouble.”
Another reader commented. “In a tightening market we must sharpen our pencils, refine our business plan, and as always … keep on prospecting. Recruiting is always a given part of the equation. Retention becomes a little more challenging in this market because the ‘Johnny-come-latelys’ are leaving the business and the good agents are looking around for their best deal.”
While several agents who spoke with Inman News said they have managed to keep marketing costs in check by shifting more spending to the Internet, some Realtors have found success in long-established techniques.
Marina Sarabia, a Realtor for Coldwell Banker Residential Real Estate in Fort Lauderdale, Fla., said she is spending a lot of money to market listings – “maybe four times as much” compared to costs when the market was hot.
Sarabia, who is a partner in a Realtor team, said her team has taken a traditional approach to marketing, and it is “paying off big time.” They placed marketing fliers on cars at a supermarket advertising a listing, for example, “and got flooded with prospects at the open house.”
Sarabia and partner Kathleen Costanzo have changed their marketing strategy, too. “(We are) going after more buyers. We are seeking out niches with the first-time buyers.” Serious investors have replaced speculators, they say.
Also, the team’s marketing efforts now focus more on financing, Sarabia said, “including terms, payments, cash to close and down payments.”
They haven’t changed their lead-tracking system – “market conditions shouldn’t affect this procedure,” Sarabia said. They now work with a mix of about 70 percent sellers and 30 percent buyers. “Inventory will remain king in any market due to the fact that inventory will always make the phones ring somehow,” she added.
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