The lull in available homes for sale continued to be the crux of many of the challenges plaguing buyers and real estate professionals alike.
Despite gradual growth in the housing stock, agents and brokers argue that it’s not enough to account for the deficit that has been brewing for a decade now.
“We’re in a housing crisis, and conventional thinking does not work,” says Greg Potts, district director for Fathom Realty in Texas. “Regardless of the crisis, you have to get unconventional and begin figuring out how you will assist your clients—whether their buyers or sellers—achieve their goals.”
Recent reports from the National Association of REALTORS® (NAR) show that housing stock hit 1.16 million units in May—up 12.6% from April but down 4.1% YoY. Couple that with the fact that there are more agents in the industry—more than 1.5 million REALTORS@ and counting—than ever before vying for the same business.
Competition for listings is a given in any housing market. However, Brenda Maher, senior vice president at Berkshire Hathaway HomeServices New England Properties, tells RISMedia that it’s especially vital for agents to stay proactive in a market with tight inventory and a growing number of agents competing for a limited number of properties.
“You do need to have bold moves in today’s market,” Maher says. “It’s really just going above and beyond, but to be in business as a REALTOR®, you need to have inventory.”
Rather than sitting back and waiting for inventory to hit the market, Maher says that she has witnessed agents leaving no stone unturned when trying to generate more listings.
“In any market, that’s the way to operate in real estate,” she says. “Those that are aggressive are the ones that can start getting the listings, and one leads to another. That’s always been the way it is.”
From direct mail pieces and reconnecting with clients to targeted consumer outreach through social media, Maher adds that getting the word out to homeowners is critical to potentially finding sidelined sellers.
“They’ve also been hosting or attending different parties in the neighborhood where they can generate listings,” Maher says.
According to Potts, thinking outside the box has become imperative for those looking to find listings for their buyers. That has included door-knocking and cold-calling homeowners in desirable markets to see if they’d be interested in listing their homes.
“In many cases right now, you must go create that inventory,” he says. “The unconventional thinking is maybe identifying a home that is specifically in a target area, and you’re literally sending a handwritten note to that client saying, ‘I know your home’s not on the market; however, your house fits the exact needs of my client, and I simply want to know if you’d even consider possibly having a conversation about it.’”
He also leverages his extensive database of previous clients in these efforts, but he says that that approach can be difficult for newer agents that haven’t built their cache of clients yet.
While the approach has fared well for Potts, who says that he has between a 20% to 25% conversion rate, he notes that the method’s success is predicated on a “numbers game.”
“If I only send one letter out, my odds are pretty low, so instead, I’m going to identify maybe ten homes in a neighborhood or area that fit my client, and we’re going to send out ten of those letters, ” he says.
Potts adds that he sometimes includes a non-descriptive snippet written by a client highlighting what they are looking for. That ultimately drives the point home for the homeowner that an interested client is ready to buy if they are interested.
“Many of the agents in the industry had called for-sale-by-owner listings for years and said, ‘I’ve got a client possibly looking’ when they didn’t,” Potts says. “They were just trying to create a listing opportunity, and we feel we have to lead with truth and value.”
Cold-calling and door-knocking have also been a part of Miami-based sales associate Mick Duchon of The Corcoran Group’s arsenal as he looks to drum up more business in the Sunshine State.
Duchon says that he and his team have taken different approaches to generate business in the current state of the market.
“I think the most effective way for us is being very targeted,” Duchon says. “Because we focus in a particular space in the market, we’ll seek out properties that we feel are aligned with our business, and we reach out to the owners directly.”
Casting a wide net with letter-writing and marketing campaigns through social media, emails and direct mail are all mixed into his arsenal. However, Duchon has found that targeting specific property owners in Miami’s luxury homes and condo market has yielded better results.
“In the luxury market, there’s a handful of buildings that exist that are considered luxury, high-priced or exclusive, and we’ll reach out to the top units in each building and find out if the properties have been sold recently, for how much and what the market is for them today,” Duchon says, adding that from that information gathered he creates his angle and pitch for the homeowners.
“We’ll cultivate the owner and reach out to them and send something nice to try to get their attention somehow through a mutual contact or by illustrating our experience in that space,” he continues. “Because there are such few properties in the market today and there are still several buyers that are looking, we’ll reach out to property owners directly when they are not listed and tell them about a client that may be interested in the property before asking them if they’d consider selling.”
Indeed, the imbalance between supply and demand has created a conundrum for real estate professionals looking to meet the needs of their buyers. However, some brokers have found that a bit of tact and asking the right questions can yield positive results.
In San Diego, Bobby Martins, a broker associate with Move Up San Diego brokered by eXp Realty, often uses his open houses to source new listings.
Martins has suggested in previous interviews that he and his team have used their open houses to find sellers among the visitors touring their listings.
“One of the things that we’ve been doing with our team is a trade-in option, and it’s a great tool to talk to a potential seller who comes in,” he says.
While many agents focus on finding a buyer during tours, Martins notes that many could miss an opportunity to cultivate a relationship with local homeowners that are likely among the pool of buyers checking out homes in their neighborhood.
“The script is very simple,” he says. “The buyer’s agent there asks everyone coming in if they live in the neighborhood. Depending on the answer, the next one is ‘do you own or rent?’ Now that you’ve identified the owner, you can tell them about the trade-in option.”
Martins partners with banks like Homelight Mortgage and New American Funding which will purchase the buyers new home with 100% cash and close in as little as 15 days. The bank assesses the value of buyers’ existing homes and will front 80% and 90% of the value of property so they can buy before they sell.
Once the first transaction closes, owner moves into the new home as a short-term renter while previous property goes on the market after extensive cleaning and staging is done which allows home to sell for more money.
Once that home sells, then the bank sells first property to the client at the same price as first transaction with just a small fee. This allows sellers to buy first and know exactly where they want to live before having to commit to selling their existing home.
“In my opinion, if we can get every homeowner in America approved in a trade-in, they are always going to be looking for that next property, and that will create more transactions as a whole,” Martins says.
While agents and brokers agree that taking proactive and, in some cases, bolder steps towards generating listings and business are part of a winning equation, Dermot Buffini, CEO of Buffini & Company, tells RISMedia that the best trained agents using “tried and true recession -proof systems” will get the lion’s share of the business in today’s market.
“Working by referral has been the lifeblood of our membership through 20 years of overheated markets as well as downturns and recessions,” says Buffini.
He encourages agents to leverage their “CRM A-List” of past and current client tops to find referrals and business opportunities amid the tight inventory challenges in the market and warns professionals to avoid becoming “paralyzed by national headlines.”
“Real estate is still local, he says. “It’s your job to become the go-to resource in your community, providing relevant and timely advice,” he says. “Surviving and thriving in today’s market requires a reinvestment in yourself through training and systems and a refocus on past and future clients.”