Real Estate Prices have dropped significantly. This has resulted in lower commissions earned by both agents or brokers. However, all is not lost for agents and brokers. They can still offset that probable loss by getting to close more deals as home prices are now more affordable.
There are more available properties being sold right now as compared to before the housing bubble happened. The market crash has put many current homeowners underwater. It means they owe more than what they can sell their houses for. As a result, these homeowners are willing to sell their homes because they can no longer afford it. They would rather prefer a smaller house just as long as they can afford it even if it means they are selling their current homes at a loss.
The important thing for them is to have money on their hands. This means taking on a new mortgage where they still have money left after every time they pay their monthly premiums. Since there are more properties being sold right now at affordable prices, it’s possible for them to make this kind of move.
As a result of the housing bubble, many people want to become first-time homeowners as the amount they pay for rentals is close enough for a monthly mortgage payment. It makes more sense now for renters to become homeowners as they can now afford it. This is their best chance to own a home and build their equity.
All of these things lead to one thing. A real need for Real Estate Agents or Brokers to help these people buy or sell properties that were very much affected by the housing bubble.
The more people an Agent or Broker can help buy or sell their properties means earning more commissions. The sheer number of properties available on the market can more than makeup for their earnings even with the current low prices. It’s as if the market is still in pretty good shape.
They just need to get more qualified leads. Getting new qualified leads helps them make more sales if they can convert them into more closed deals even in these bad market conditions.
The question now is, how do you get new qualified leads?
There are a lot of ways.
- Advertising in traditional and digital media can help.
- Adding a squeeze page on your blog or website and engage them through email marketing.
- Sending direct mails to households in your area or tapping into social media.
- Buying lists from agencies that keep and offer those lists.
Any of these methods still work with varying success rates. The best way you can generate and build new leads is starting with your own network.
Do you know what’s the best method you can get new leads in the shortest time possible?
It’s in buying lists.
Realtors who want to do short sales can potentially do well in the current market, but there is a problem. Doing short sales really takes time away from what Realtors should be doing. Realtors should be helping regular sellers sell their properties and helping buyers buy properties. Realtors should partner with companies that specialize in the short-sale process. Here is the problem. A short sale includes two steps that are not found in a regular real estate sale. And most Realtors are not trained to perform these steps. Let’s look at the structure of a short sale: Acquisition, Negotiation, Sale to buyer. The acquisition and negotiation steps are the culprits. These steps require the Realtor to interact with the short-sale lender. This interaction doesn’t occur in a “normal sale.”
Look a “normal sale” first. In a “normal sale,” the Realtor usually follows the following steps. The Realtor signs a listing agreement with a seller and lists the seller’s property on the Multiple Listing Service (MLS). The Realtor also uses various means to market the property. Buyers make offers (usually through other Realtors) to buy the property. The listing Realtor presents all offers to the seller who selects the most appealing offer. The process then moves through escrow to closing. These are not complicated steps. Now with the short sale, things are different. The value of the property is less than the amount the owner (seller) owes on the loan. This creates some selling problems. Buyers will not buy the property for an amount that will help the owner cover the existing liens and closing costs. There is no way the Realtor ( a business person) can make a commission (business income). What now? The Realtor finds out about short sales and how the “short-sale lender” may take less than what the owner owes on the property. But there is a procedure. This procedure involves those two steps I mentioned earlier: Acquisition and Negotiation.
Acquisition: So the Realtor stops doing what he or she normally does (finding properties to list and/or buyers of properties) and enters the acquisition phase of the short-sale process. Acquisition means Buyer The owner fills out lots of documents to convince the “short-sale lender” that the owner’s hardship prevents the owner from paying his or her loan. This is the short-sale package. But one thing is missing! An offer to buy the property. You see, the complete package must contain an offer from a buyer to buy the “distressed” property. And the listing Realtor does not have any offers yet. Of course, the Realtor can put a price in the listing without having an offer. But that price has nothing to do with reality. And the listing will no doubt include the words, “lender approval necessary” or some words like those. But suppose that price attracts some interest from buyers whose Realtors send offers to the listing Realtor.
Now the Listing Realtor can send a complete short-sale package to the short-sale lender. This takes us to the next step and more unproductive time, Negotiation. Negotiation, lenders usually have a department called Loss Mitigation. A loss mitigator is assigned to the short-sale package and this person’s job is to “mitigate” (lessen) the lender’s loss. The Loss Mitigation departments of lenders vary in their procedures, but one thing is for certain. They consume irreplaceable Time. But stop here for a moment. This is not really about the Loss Mitigation departments of the lenders.
I let out a big sigh when one of my students called me. He talked with a landowner who lived in Michigan but owned a parcel of land in Florida. The landowner was interested in selling but said that first he was going to call a Realtor in Florida to determine the value of the property. So why did I sigh? My experience says that they are going to contact the wrong person and get bad advice (mostly in regards to price). Ultimately the deal will fall through. Most sellers don’t understand that they cannot contact just ANY Realtor to help them make an informed decision. They are best served to contact a Realtor who is experienced in land. It is the same dynamic if I am considering buying a self storage complex. I don’t call any Realtor – I find one who understands how to value commercial properties. Sounds simple doesn’t it? I have had too many experiences in negotiating with landowners where the deal was derailed by a Realtor who didn’t have experience valuing land. This isn’t a knock against Realtors in general.
Let’s face it – to value land in this economy is tricky at best. It is imperative to find a land professional that knows the local area and is familiar with land that has recently sold in there. So if I am going to do a deal in Alabama, I am calling a Realtor who is experienced in land statewide as well as locally. I am not going to call a land Realtor in Georgia or North Carolina because land in Alabama is unique in regards to terrain, demand, price per acre, etc. Why am I such a big fan of land Realtors? They are a critical person in the process to understand land values and whether a parcel is a good value or not. I cut my teeth in land when I was an office manager at a land brokerage (I am an investor not a Realtor). While I was there, about 60% of the buyers bought land sight unseen. It was because they were looking at land like stock. They were TRUSTING that the land Realtors at the office evaluated the property correctly. My boss was the stereotypical land broker. He came to work dressed in his cowboy hat and boots and had a drawl that this city boy could sometimes not understand. But he knew his area and was passionate about finding only the best deals for his buyers.
But the stereotype of the land Realtor is changing. With the advent of the Internet, land Realtors still know their area well. But now they have evolved into Internet real estate specialists creating high quality marketing pieces for websites and email requests. It is my opinion that we are not going to have enough experienced land Realtors to service the upcoming demand for all land types. With the stock market and economy in continued decay, more and more investors are going to turn to land as one safe haven to place their money. Investors are going to have to trust an experienced land Realtor’s opinion on finding good values. Are you one of them? I have been a part of over 600 land deals and virtually every transaction has been closed with the help of a land Realtor.