Mining the Margins
There’s value in marketing to people waiting in the wings. Learn how some practitioners are getting renters and would-be sellers off the sidelines.
May 22, 2014
Three years. That’s how long it took Teresa Scott-Tibbs, a salesperson with Keller Williams Realty in Austin, Texas, to turn one renter into a home buyer. Still, she says there’s value in marketing to potential buyers waiting in the wings.
“I came into this business understanding that everybody deserves to own a home, no matter if they’re renters or not,” says Scott-Tibbs, who started selling real estate in 2003.
As she’s grown in her career and expanded her sphere, Scott-Tibbs has helped more and more renters enter the buyer market. She just had three begin looking for their first home in March alone.
“Our market is saturated with renters, but it’s important for those people to know that for the amount of money that they’re paying for rent, they could own their own house,” she says.
Whether their credit is bad, they’re living with the folks, renting, doing the “wait-and-see” jive, or just too damn scared to move, consumers have a variety of reasons for sitting on the sidelines. But studies show that Americans refuse to give up the dream of home ownership, and real estate practitioners are encouraging consumers to take a leap of faith.
Austin resident Tracy Burkhalter, 49, was a lifelong renter before turning to Scott-Tibbs. “I met her through my beautician. I always had a dream to own a home and finally decided not to procrastinate anymore and to make my dream come true,” Burkhalter says.
Scott-Tibbs helped Burkhalter clear up some minor credit issues, and in November 2013, Burkhalter moved out of the 600-square-foot, one-bedroom apartment she’d been renting for $700 since 2000 and got the keys to her three-bedroom, two-bath, 1,100-square-foot dream home. Burkhalter says her monthly mortgage is a little higher than $700, but her rent had been increasing every year.
She says she believes that Scott-Tibbs wanted to see her accomplish the goal of owning a home. “The agent has to care, be patient and have knowledge,” she says. “Real estate agents should not discount renters because we have a goal and have dreams, too. We need the right person to guide us through the process.”
Scott-Tibbs continues to broaden her reach with renters. One marketing tactic she uses is to upload addresses to Vistaprint and send regular flyers and postcards to residential customers, rental communities, and subdivisions in Austin, North Austin, and the adjacent suburbs.
Similarly, Kevin Oldham, chief marketing officer for Kansas City, Mo.-based United Real Estate, says the 14-office, 700-agent company is proactively reaching out to renters through marketing, home-buyer seminars, and education.
“Some folks have determined that renting was a safer way for them to go due to the instability of the market,” Oldham says. But United’s quarterly home-buying seminars provide market insights for the uninformed, incentives (help with closing costs, for instance), credit help, and an opportunity for consumers to meet and interview agents and choose one who best fits their personality and real estate needs.
“Being an active partner and providing them with information is paramount. There’s a lot of information out there, but we try to help them break through the clutter,” he adds.
The payoff is worth the extra effort. Many long-term renters are able to spend more money than the typical first-time buyer — if they qualify, of course, Oldham says.
As lending practices tightened, a growing segment of credit-challenged potential clients were lost to the process. “They would fall out of the funnel forever,” Oldham says. But rather than lose these clients, United found a way to keep them in the fold.
The real estate brokerage partnered with Lee’s Summit, Mo.-based Credit Guys, a company that can “tidy up [clients’] credit reports, and then they can come back to us in six months,” Oldham says. “In essence, we are establishing trust. We’re telling them, ‘Hey, we’re not going to give up on you.’ These people just need a little longer timeframe in the decision-making process, and we want to stay front and center with those folks and have them remember us so that we can become the partner of choice when it comes time for them to buy.”
Credit Guys works with consumers to fix credit problems and raise scores. (Average cost is $40 to $60 per credit-line item fixed; no charge if a correction can’t be applied.)
“We call it turning an ‘if’ client into a ‘when’ client,” says Credit Guys president and co-owner Dave Fulk. “Sometimes it takes as little as a few weeks; sometimes it can take six months. But we help them address these issues that are preventing them from being able to purchase a house, get them in a better financial position, and then send them back to the real estate agent.”
Cassie Daughtrey, a broker with Realogics Sotheby’s International Realty in Seattle, says she’s not only approaching renters about purchasing, but also convincing owners who’ve been waiting in the wings to sell.
Daughtrey, licensed since 2005, closed $15 million in 2013. She says demand exceeds supply in her market. Indeed, Penske Truck Rental’s annual list reports that Seattle — home to Amazon.com, Boeing and Microsoft — is one of the top 10 cities for Americans on the move.
Competition is fierce. In March, Daughtrey got eight offers on a home listed for $489,000, and it closed at $551,000 — an all-cash offer to boot —after six days on market. The young couple who bought the house were first-time buyers and had lost two other homes to multiple offers.
“There are people moving from all over the country to Seattle, but there are only so many homes. We don’t have urban sprawl. We have a couple of condos going up, but we do not have a lot of inventory,” Daughtrey says.
To pull sellers off the sidelines, Daughtrey stays in touch through LinkedIn and Facebook, sends regular marketing updates and listings to her sphere, and posts blogs to her Savvy Seattle agent site. She also meets clients and presents in person.
“If it means meeting with your clients 10 times for coffee to discuss their goals and expectations, that’s what you have to do. You have to treat those hours as part of your job if you want those sales,” she says.
Also, Daughtrey adds, set the expectation early and often. Educate your clients to be competitive. Let them know how the process is going. Be prepared to act in the best interest of the client. And no matter what, keep sending your potential buyers listings.
“Don’t leave it up to your client to find properties online. They have their own jobs. Our job is to be looking for homes for them. It doesn’t hurt to send listings,” she says.
“I tell clients, ‘My job is to look out for you. My job is to make sure that you’re aware of what’s on the market so that you do not miss out on an opportunity.’ And the right home really is an opportunity that should not be lost,” she says.