Moderator: Alex Perriello, Special Liaison for Large Firm Relations, NAR
Participants: Ron Peltier, president and chief executive officer, HomeServices of America – Minneapolis, Minnesota
James Estes, broker-owner, Gaslight Properties, GMAC Real Estate – Columbia, Missouri
Judy Reeves, chief operating officer and executive vice president, NRT LLC – Parsippany, New Jersey
The U.S. housing market has taken a beating in the press this past year. While a market shift has certainly occurred, most of us believe the entire story is not being told. What market realities can we help to set straight, clarify, or put in the right perspective for consumers? Three industry experts offer their thoughts and strategies.
Alex Perriello: What impact has media coverage of the housing market had on the market and your business?
Ron Peltier: The media likes to create sensationalism, but the fact is we’re going through a national correction. What they’re doing is sort of like trying to predict or explain a national weather forecast. But there is no national weather forecast. There are only local stories, and they’re more relevant. Still, negative press frightens potential buyers. If they think housing is going to fall by the wayside, informed consumers will sit on the sidelines. The impact on our business, the net result today, is that we have homebuyers who have not lost their belief in homeownership or their desire for a home, but they are waiting on the sidelines for the media or our industry to convince them to buy.
James Estes: A large percentage of our business is in the Lake of the Ozarks market, primarily a retirement, vacation and second homes market. For more than a year, the media has inundated our customers with sensational commentary. The effect of this negative media on our business is just short of devastating. Since most of the market is not primary housing, our buyers’ election to buy is greatly affected by what they hear from the media. So customers come to us expecting to “low ball” offers, while some investors believe that it’s time to “bottom fish” for deals.
Judy Reeves: It’s always about the basics! Our sales associates have continued to do what they have always done – focus on applying the top-notch technology and marketing tools NRT offers to attract buyers for their listings, educating sellers about properly positioning and pricing properties, negotiating fairly and effectively, and monitoring market conditions while simultaneously counseling clients through one of their most significant financial transactions.
AP: What steps have you taken to buffer the negative reports?
RP: The media has focused on irrelevant facts that we must dispel because they’re not telling the whole story. While sales of existing homes are off from their high, 2007 was still the fifth best year on record for existing-home sales. As for plummeting home prices, we’re still within 2% of the all-time high median existing-home price set in 2006. The media has painted housing as a bad investment, but there isn’t a single investment that doesn’t have a bad year. Accordingly, homebuyers in for the long haul always come out ahead in building wealth. The average return on a 5% down payment over 10 years is usually 3-5 times greater than stock market returns. The thing we have to do as an industry, because real estate is largely local, is also tell the story to the local media about each of our local markets. Sellers controlled the market over the past six years, but this is now a great opportunity for buyers to negotiate. Buyers can put a stake in the homeownership ground and find the property of their dreams. It’s up to us to get out into the media and help tell the story through market updates on our Web sites and other media venues.
JE: To combat the negative media, we have reminded our customers and the general public that all real estate is local and problems in isolated markets should not be relied upon to evaluate the conditions in our market. Our agents have effectively used MLS and company statistics to demonstrate how prices have actually increased in some market sectors and the number of transactions in many areas has also increased.
JR: Our main thrust is education – providing sales associates and leadership with reports, analysis and scripting on key issues that can be tailored to specific markets where necessary. We have held nationwide conference calls on mortgage and mortgage funding with our leadership to provide instant information, and we had significant leadership participation on the NAR mortgage call. Many of our salespeople and management also participated in the NAR call-to-action on mortgage funding legislation. In addition, we circulate a semi-monthly communication for use by everyone in the company that shares current quotes/commentary from those in the industry. This provides opportunities for great dialogue in the sales office. We believe that personal communication is by far the most powerful way to share information.
AP: How have agents, potential buyers, and/or sellers responded?
RP: We’re probably still in a transformation mode. In the boom year of 2005, some agents may have grown a little careless because business was too good and too easy. It takes a while to retool our skills and our attitudes when the market shifts, but this is what began to happen for the most part in 2007. For people-agents, buyers, and sellers-to be successful going forward, they have to change their methods of operating and thinking. Reeducating our agents about the realities of the market and updating buyers about new credit quality standards and mortgage guidelines are among the things we need to focus on today.
JE: Our agents have enjoyed great success using our approach on a one-on-one basis. But since most of our customers come to our market from two major metropolitan areas, each more than a two-hour distance away, our difficulty is getting our message to those clients. Since our market is primarily elective, our sellers have not seen prices decrease significantly because there is no urgency for them to sell. Days on market have increased because of the dynamics of sellers not needing to sell and buyers expecting to find a deal.
JR: We are proud of the fact that we continue to outperform the market in a high percentage of offices. We believe that consumer confidence is bolstered one client at a time, with our sales associates delivering truly remarkable, as well as educated and informed, service throughout the transaction-and after!