Elyse Umlauf-Garneau is a Chicago-based freelance writer and former senior editor with REALTOR® Magazine.
Rising to Market Challenges
Practitioners share their secrets for handling whatever the real estate market throws at them.
March 1, 2006
It’s easy to succeed in a boom real estate market. But when the market slows — or if you’re faced with other market challenges, such as unrealistic seller expectations or a glut of listings — those adept at adapting and responding to these challenges with a little creativity are best able to continue to thrive.
Here are some of the ways that practitioners are responding to curves their markets are generating.
Dealing With Unrealistic Expectations
Dispel myths and re-educate clients. Peter Tortorello, a broker with the Chicago Premier Real Estate Team at Koenig & Strey GMAC Real Estate in Chicago sometimes faces clients frightened by real estate bubble headlines and those with unrealistic expectations, such as sellers believing they should make a $50,000 profit because the guy down the street did. “You really have to be able to know the market and its history and show them facts,” Tortorello says.
It’s a constant education process in Billy Perlstein’s Orinda, Calif., market, where increasing market times have surprised sellers who still believe their market is brisk. A broker with Prudential California Realty, Perlstein says, “I have to re-educate them, explain the reality, and then substantiate it with numbers.”
Perlstein devotes extra time during listing appointments to show market data illustrating unit sales declines and increased market times. Because of longer market times, he aims for listing agreements of 120 to 180 days, instead of 90 days.
Do homework. The listing presentation has become more important in other markets, too. “When properties sold in three days, the preparation work — the need for statistics and graphs — for listing appointments was shorter,” says Todd Shipman, CIPS, CRS®, a broker with Great Minneapolis Real Estate Co. Inc. in Minneapolis and 2006 president of the Minneapolis Area Association of REALTORS®. “Now, that appointment needs to be a practitioner’s shining moment.”
Shipman believes it’s an opportunity to talk about what you do, showcase the unique skills you bring, and justify your commission.
When Facing a Glut
- Deliver incentives. In neighborhoods where condos are overabundant, Deb Greene, ABR®, CRS®, a broker with Coldwell Banker Burnet in Plymouth, Minn., suggests condo sellers offer to pay one year of assessments or lease a parking spot for a year in buildings that lack parking.
- Get creative. Creativity also moves properties when there’s a glut. Pools are hard sells to parents who fear for their kids’ safety. Greene suggests sellers pay for swimming lessons for buyers’ kids or buy a pool alarm system that alerts people if there’s movement in the pool.
Overcoming Seasonal Issues
- Use current photos. In markets with dramatic seasonal changes, timely photos are important to keep listings looking fresh. In Minnesota, if you see summer photos in a January ad, it’s a red flag that the property has been sitting. Greene says, “It raises the question, ‘What’s wrong with the house?’”
- Freshen information. When properties have lingered on the market and owners have subsequently upgraded the home, Greene includes notes in the MLS outlining the upgrades to alert colleagues that the property deserves a second look.
- Don't leave it empty. Shipman says the number of vacant homes has risen and Minnesota’s harsh winters complicate selling them. He encourages owners to leave some furniture so the house isn’t austere. To further humanize the space, he often hires stagers.
- Keep driveways and walkways shoveled. This is critical to keep the home looking well-kept and to avoid injuries. Shipman also makes certain that the heat is turned up before showings. “No one wants to walk into a cold, empty house. It screams desperation and buyers automatically think price reduction,” he says.
- Cool down the house. Make sure the air conditioner is turned on if the home is in a warm climate. Prospects walking into a sweltering property during a Florida summer would likely be put off.
- Be a good neighbor. David Kerr, a salesperson with Koenig & Strey GMAC Real Estate in Glenview, Ill., has a way to build goodwill and name recognition, and make your listings look sharp: Plow snow on the entire block where you have a listing and let neighbors know you’re the elf responsible for the unexpected gift. Because Chicago has experienced a mild winter so far, he’s yet to put the idea to the test.
- Get fix-up estimates. Kerr strengthens the appeal of problematic properties by bidding out jobs and providing soft bids (a rough cost-per-square-foot estimate) to show prospects how houses could be modified to fit their needs. It’s a way to counter buyers’ objections, and the approach recently helped Kerr sell a property with too small and too few bedrooms. “The buyers said that just knowing they could expand was the main reason they bought the house,” he says. He aslo recommends building relationships with contractors. “It doesn’t take much time for builders to give a rough estimate, and the benefits [new business] to them are potentially huge,” he says.
Be Ready for Any Challenge
A temperamental market or hard-to-please clients don’t have to put a kink in your business pipeline. With the right know-how and a little ingenuity, you can meet any market challenge with finesse and get to closing.