Zillow’s Consumer Housing Trends Report for 2017 reveals some surprising first-time buyer trends, the impact of rent increases on home sales, how sellers are finding their agents and data supporting face-to-face marketing.
With October being the ideal month to write your 2018 business plan, now is the time to look ahead, analyze trends and find opportunities. Below you’ll find six insights from Zillow’s report that you can use to get ready for next year.
It’s time to revisit working with first-time buyers
According to Zillow, 42 percent of all homebuyers are first-timers. Most of these potential buyers are renting, and half of them said they would consider purchasing. Moreover, 79 percent experienced a rent increase and 57 percent said that rent increase impacted their decision to move.
Because 28 percent of renters are currently leasing a single-family home, they are excellent candidates to become first-time buyers.
You can reach them through Facebook ads or through a REiSource, a service available through most major title companies.
REiSource allows you to narrowly target your marketing by income, location, size of family — almost any parameter you want to search. The cost is typically less than 10 cents per name.
Don’t limit your showings to resales
The Zillow survey showed that 52 percent of buyers would consider new construction homes, another 36 percent would consider a foreclosure and 34 percent would consider a short-sale homes.
Many agents shy away from new home sales because they are unfamiliar with the process, lack trust in the builders and sales staff, and it can take up to a year or more before the agent receives a commission.
If you’re an agent who is willing to cope with the differences between new home sales and resale (the sellers are usually a corporation with different regulatory requirements, upgrades must be partially paid for upfront and uncertain closing dates because the builder can’t control the weather, the supply chain and other factors that may delay the closing), this is a great opportunity where there is little competition.
In terms of foreclosures and short-sale homes, unless you are experienced in this area, it’s usually smart to enlist your manager’s assistance or to partner with another agent who is familiar with what it takes to close what can be a very difficult, drawn out transaction.
Focus on safety
The news is packed with fear-inducing events — Harvey, Irma, Maria, North Korea, the shooting in Las Vegas and major earthquakes in Mexico. In good times, fear-based messages such as, “Prices are going up — if you don’t buy now, you may never be able to afford to buy,” usually work.
In times of stress and turmoil, however, these fear-based messages are counterproductive.
A better approach is to focus on being safe. In fact, the Zillow report concludes: “More than anything else, buyers want their home to be in a safe neighborhood (71 percent).”
To tap into this trend, use HomeDisclosure to compare neighborhoods based upon the risks from environmental hazards, crime statistics, threat of natural disasters, as well as whether the house has ever experienced a fire, flood, hail damage or any other major insurance claim.
You can also remind your buyers about the “safety” that comes from having a fixed-rate mortgage.
For example, “Mr. and Mrs. Buyer, if you buy now with a fixed rate mortgage, you can feel safe and secure in knowing that your mortgage payment will be the same for the next 30 years.”
Keep those open houses open
Zillow reports that “buyers everywhere and in all demographic groups value seeing a home in person to decide if is right for them. This includes taking a private tour (78 percent) and attending an open house (43 percent).”
Why you must be face-to-face
Despite the millions of dollars spent every year marketing online, only 18 percent of the sellers learned of their listing agent from a real estate website or app, search engine, social networking website or other online source.
In contrast, 24 percent first learned of the listing agent they hired through a referral, 17 percent had previous experience with the agent, 15 percent knew their agent through their community, and 5 percent met them at an open house — that’s a whopping 61 percent of all sellers learning about their agents through referrals or being face-to-face with the agent.
Traditional methods (direct mail, newspaper ads and yard signs) accounted for and additional 13 percent. These statistics mirror the patterns that the NAR Profile of Buyers and Sellers has reported for the past several years.
Brush up on your ‘contingent closing’ skills
Sixty one percent of sellers are selling for the first time, and 71 percent are simultaneously looking to buy another home. Millennials make up one-third of all sellers and almost half of first-time sellers are millennials (46 percent).
The inventory shortage is wreaking havoc with move-up buyers because they have difficulty securing a property, and even if they do, a contingent close can be exceedingly difficult.
The options, in this case, are relatively limited:
- Sell their current home and move into a rental until they can find a property.
- Buy their move-up property and be prepared to carry the costs of two houses while they wait for their current property to close, provided they can qualify or find a renter for their previous property.
- List their home, secure a buyer and then arrange for a leaseback for up to 90 days (or more) on their current property until they can find a suitable replacement.
None of these options is for the faint of heart, and it’s smart to seek management assistance if you find yourself in a contingent sale situation.
As you make your business plan for 2018, the bottom line is to get face-to-face with your past clients and sphere as often as possible, prospect leased single-family rentals for first-time buyers, familiarize yourself with the new-home market if available in your area and make sure your buyers feel as “safe” and secure as possible about their purchase.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/
