Capitalizing On The Shift
If you suspect that your seller’s market might be coming to an end here are six strategies to help you take advantage of the shift.
1. Telltale Signs
Inventory increases almost always signal a market shift but what are some of the other telltale signs?
- Increased days on market.
- Increased commissions to attract more traffic.
- Builders advertising free upgrades interest buy-downs and other incentives.
If you spot any of these take immediate steps to monitor how quickly these changes are occurring. If the rate is slow and gradual you might experience the soufflé effect — a slow flattening of the market and then stability.
On the other hand if inventory and days on market for properties are increasing at a rapid rate your market may be transitioning into a serious downturn. During the transition there will be flat market where there is a balance of both buyers and sellers. This might last for only a few months before sliding into a buyer’s market so it’s critical to change strategies immediately.
2. Change your business plan
Because listings take longer to sell in a flat or declining market you must allot more time and money for marketing each property. Making matters even more difficult buyers want to see everything on the market and feel little urgency about deciding which house to purchase.
3. Specialize in listing first-time buyer properties
Unlike the luxury market where slowdowns are often felt first the first-time buyer market is usually the last part of the market to be hit by a downturn.
Because many first-time buyers struggle with saving up a down payment market to them by letting them know they could qualify for down payment assistance.
DownPaymentResource.com aggregates all the various down payment assistance programs across the country and up to 84 percent of all homes qualify.
4. Discuss market statistics with your sellers
When you go on a listing appointment be prepared to demonstrate to sellers that prices are no longer increasing. The easiest way to do this is with WeissAnalytics.com which shows you on a house-by-house basis whether the market is increasing flat or decreasing as well as which direction it will trend during the next six to 12 months.
Alternatively calculate the average sales price for the past six months for all listings in your marketplace. Then calculate the average sales price for the preceding six months.
If the prices are the about the same your market is flat or transitioning. If the prices during the past six months are less than the preceding six months you are in a declining market.
5. Listings are no longer the name of the game
Smart agents always control the listing inventory. Nevertheless when few listings are selling it’s smart to accumulate buyer clients who are ready to purchase. Agents who survive down markets do so by having a balance between aggressively priced listings and motivated buyers.
6. Monitor activity
Perhaps the most important strategy for prospering in a changing market is to monitor which areas are experiencing the most sales. Actively prospect and hold open house in these areas as often as possible. Pay attention to your office sales board as well as the MLS to determine where the activity is the greatest.
Recognizing when your market is shifting and changing tactics to adapt will keep your production strong. On the other hand agents who fail to spot the shift will soon be wondering: “What happened to all my business?”