Erica Christoffer is a multimedia journalist and contributing editor with REALTOR® Magazine. In addition to writing print and online articles, Erica oversees the magazine's Broker to Broker content, co-manages the 30 Under 30 program, and manages the YPN Lounge. Connect with her via email: email@example.com.
Coping With Low-inventory Blues
As lost bidding wars take a toll, it's time to restrategize for your well-being.
July - August
Sonia Norville’s typical workday this spring ran from the crack of dawn until 10 p.m., with zero days off, as she shifted between showing houses in person and hunting for promising listings online for her eight buyer clients. The Weichert, REALTORS®, agent, based in Union, N.J., drove one couple all over the state, seeing five to seven properties a day for about eight weeks straight in a hunt for the right one. They made offers on eight homes and were outbid every time.
“It’s extremely difficult,” she says. “You spend so much money on gas, plus the energy it takes out of your day. And you’re not getting paid for any of it.”
With demand for homes far exceeding supply throughout the country and the median time on market falling to a historic low of 17 days in April, it’s not only buyers who are feeling discouraged. Agents, especially those focused on buyers, may be facing a dynamic they’re completely unaccustomed to. Many have never worked so hard and have so little closed volume to show for it. Every lost bidding war may be taking a toll on their mental health, in addition to their wallet.
“Buyers are making offers, and in most situations, they’re not winning the bid, and then they’re getting angry at the agents,” says Greg Harrelson, broker-owner of Century 21 The Harrelson Group in Myrtle Beach, S.C., a firm with 205 agents. “You can’t absorb everyone’s anger and then let that pile up on your shoulders as stress.”
More Agents Than Listings
Brad Allen’s agents don’t get a day off. Their situation is similar to Norville’s. There are 4,700 agents with only about 700 houses to sell in his Columbia, S.C., market, says Allen, CRS, a partner and broker-in-charge of The ART of Real Estate. Yet his 32 agents have an estimated $45 million in buyer volume that they can’t find houses for.
It’s not uncommon for three or four agents from his office to be working with buyers vying for the same house. But often none of them gets the sale. “The work environment feels more stressful than it was during the last recession,” Allen says.
Cutting a Buyer Loose
When Norville decided that she could no longer spend endless hours driving the buyer couple to showings with no results, she had to let them know diplomatically that it was time for them to work with someone else. She suggested they look in markets further away, including out of state, and work with an agent who’s more familiar with those areas. She also established firmer boundaries for her workdays. Her initial buyer consultations today are longer, usually lasting at least two hours so she can outline more detailed strategies for competing in this supercharged market. One suggestion is that buyers offer a “signing bonus” of $1,500 to sellers on top of the offer price, disclosed in the sales contract, which gives sellers immediate access to cash. While working with buyers has long been her specialty, Norville is now networking more with listing agents in her market and others in an effort to gain more listings.
If we don't take care of ourselves, then we can't take care of our clients.
Seller prospecting is also a focus for Molly Gallagher, partner with the Falk Ruvin Gallagher Team at Keller Williams Realty in Whitefish Bay, Wis. Her team sent out postcards in the spring that featured one simple question: “What would you sell your house for?” On the back was their team picture and contact information. They’ve received several leads from that mailing.
When buyers’ offers are repeatedly rebuffed, clients start to wonder if they’re working with the right agent, Gallagher says. “It’s hard to explain that this is happening to everyone. They get excited, geared up, and then they lose again,” she says, estimating that buyers today are making four to five losing offers before getting under contract.
It’s more important than ever for you to understand the financial picture of prospective buyers before you commit time to house hunting with them. Buyers who require financing and don’t have a significant nest egg to compete with will find it nearly impossible to purchase in her market now, Gallagher says. For some, the best approach for agents is to let prospective buyers know up front that this isn’t the right time.
Allen says if the client can stretch their budget to pay what the market is demanding, he and his team are willing to put in the time and energy. But he has also been referring buyers out to agents in more distant markets where they may have better luck finding something in their original price range.
To alleviate the burden on his sales team, Allen hired three licensed showing agents in May and also pays them to go to inspections. One is a retiree; the others are college students who want experience. Norville also intends to bring on a junior agent who’s eager to learn and show properties. She plans to pay them a flat showing fee and give them 35% of her commission if the buyer closes on the home they showed.
Harrelson, from Myrtle Beach, S.C., and other real estate pros advise that no matter how busy your work life is, it’s essential to take time regularly to unplug. “There are agents out there answering texts and emails at 11:30 at night,” he says. He’s added time into his own schedule to immerse himself in one of his favorite hobbies: classic cars. He’s currently working on a 1968 Camaro, 1955 Chevy truck, 1964 Impala, and a 1969 VW Beetle.
“Get lost in an activity—that’s a good way to manage your stress. Then, the next morning, you’re ready to go,” he says. “If we don’t take care of ourselves, then we surely can’t take care of our clients.”
Lissette Leon, with Century 21 Triangle Group in Raleigh, N.C., takes five-day trips once a month to compete in equestrian shows, but she stays connected to business. She gets a colleague to show homes to her buyers while she’s gone but is available to write and submit offers. Her horse, Helios, even has a business role; her saddle bears the Century 21 logo.
While Gallagher’s team sales volume in the spring exceeded its levels at the same point in 2020 and 2019, there’s still a lot of pressure, which they deal with by meeting frequently to vent and to share tips. “We talk about offers and why [our buyers] missed out. We look at the various tactics and share lenders who can do different things for our buyers,” she says. “We also have happy hours with Prosecco.” Even if they can’t increase the supply of 3-bed, 2-bath listings, such gatherings do wonders for team spirit.
Read more about sales tactics being used to compete in low-inventory markets at magazine.realtor/competition.