Editor’s Note: The Playbook is an RISMedia weekly segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every Thursday for another addition to the series.
The current market shift has been filled with its share of uncertainty that agents are mitigating, but that can be even harder when trying to help guide consumers. As conditions have moved away from the pandemic-induced frenzy, buyers and sellers likely need help to embrace and understand the changes that come with a burgeoning market transition.
Guiding clients through current and future market shifts will take tact as agents must clarify confusion, break through misconceptions and ultimately help align their client’s mindset toward the new market with the reality of the current correction.
From planning and pivoting as new trends manifest, an agile agent is typically successful. For those thriving in this new normal, here’s how they serve their clients amid the uncertainty.
Numbers don’t lie
Sellers may not like to hear it, but the days of massive bidding wars that produced offers well about the asking price are gone.
While that’s the reality of the current housing market, agents acknowledge that it’s a point of confusion—and sometimes contention—that you’ll likely need to navigate.
“Sellers have a psychological alignment with their expectations as well, so sometimes they are not ready to reduce the price, or they are not ready to list at a price that an agent may share with them to sell the property aggressively,” says Alison Elder, founder of the Elder Group Tahoe Real Estate with Berkshire Hathaway HomeServices Drysdale Properties.
That’s mainly attributable to the surge in home prices that the U.S. housing market experienced during the height of the pandemic-induced frenzy, industry professionals say. While the market is shifting, many sellers are stuck in the past regarding their home-price expectations.
“Sellers are using last year’s sales price and data to think that they will have the same sort of sale now,” says Michelle Kim of Long and Foster Real Estate. “They are using prices and the number of days sold from last year to predict what they will get for their homes right now.”
That’s not going to cut it in today’s market.
Data is a significant aid while advising sellers, but Kim says that getting some clients up to speed requires fresh numbers.
“I have to advise them and show them much more recent data,” she explains. “I’m really narrowing things down in the last one to two months so that we can stay in front of the market.”
That’s a similar approach that Elder has taken with her seller clients in the Truckee-Tahoe market—one of California’s most coveted second-home markets.
The sky isn’t falling, and neither are prices
A lot has changed in the past two and a half years. At the height of the pandemic-induced housing market, high demand spurred on by low mortgage rates, low inventory and extra cash in the market helped fuel the buying and refi frenzy that carried the market.
Much of that has dissipated as the market shifted. While agents and brokers understand that to be part of the cyclical nature of real estate, consumers may not, according to Elder and Kim.
“Across the board, buyers feel the market is declining, and on a certain level for all of these factors, it probably is,” Elder says.
Surging mortgage rates and elevated inflation have added to the affordability challenge that the double-digit price growth of 2020 and 2021 fueled. As a result, Elder notes that many buyers have been forced to reassess their plans to purchase.
“I often hear from our buyer clients that ‘I don’t want to overpay,'” she says.
For Kim, many buyers are holding out in hopes that a potential housing market crash and a repeat of 2008 will provide a better opportunity to purchase a home.
“They all believe that next year the property values will drop considerably, so they are all waiting to get this amazing deal next year,” Kim says. “I tell them that no one has a crystal ball, and there’s no guarantee for any of this in the future. They have to buy when it is time for them to buy.”
According to Elder, mitigating the confusion among buyers will take some hand-holding.
“What I try to do with every buyer client is educate them on that property, where it sits within the comp range, and how it appeals to the client, and then align accordingly with agent relationships to negotiate the best deal that we can for that particular property,” she says.
A little perspective never hurts
Finding out that you may have missed out on capitalizing on the previous housing boom could be hard to swallow. According to Elder, agents will need to work with their seller clients to realign their expectations with the reality of the shifting market.
“What we found up here in a vacation market, in particular, is that houses that are priced right go most quickly, they typically sell for the most, and your opportunity to have multiple offers is much greater,” she says.
Elder explains that she typically “talks about the positives of the property and what the consumer feedback will be upfront” when working with a seller on a pricing strategy.
“Then we discuss the alignment, the sellers’ goals and timing, and review the analytics of the listing side of the business about conveying your property in a reasonable amount of time for the most value the property can deliver in this market,” she adds.
While some sellers may be eyeing the sidelines as the market conditions continue to shift, Elder suggests that providing some big-picture perspective accompanied by compelling data can help ease some anxiety.
“The sellers have to remember that they have benefited from the explosive pricing increases that covid and post-covid have delivered,” Elder says. “I really see this as a wonderful time to sell a property. Two years ago, their home wouldn’t have been worth this because everything had moved upward.
Key takeaways:
- Keep your data as fresh as possible in a rapidly changing market.
- Providing some big-picture perspective accompanied by compelling data can help ease some anxiety.
- Even though the market is slowing, sellers are still in better shape than two years ago
- Seeing is believing, so get your clients out to showings for real-time perspectives.
- Data isn’t enough; you’ve got to know the products and what’s happening in the market.
