The most recent curveball the real estate market has served up for home sellers, buyers and the agents who represent them is a scarcity of homes for sale. In fact, listing inventory in the top 54 markets is down 24 percent year over year and a whopping 61percent below the peak in September of 2007. With fewer foreclosures hitting the market, more sellers holding off on selling and new construction lagging behind demand, buyers enticed by remarkably low mortgage interest rates are finding slim pickings. In pockets all over North America, a historic buyer’s market has suddenly shifted to a seller’s market. As a result, many are experiencing bidding wars and multiple offers as demand outstrips supply.
These “mini-housing bubbles” may or may not be a harbinger of lasting housing recovery, but for now, they represent a major challenge for real estate professionals who specialize in listing houses for sale. What’s a listing agent to do when there are no homes to list?
Simple, the successful adapt.
By definition, adaptability is the ability to navigate change successfully. Just as we tell readers in SHIFT, “If you can shift gears – shifting both your thinking and your tactics – you will accelerate ahead of the rest.” Martin Bouma of Ann Arbor, Mich., was one of the first to see this market shift and adapt his business to the new reality.
How? He has embraced the rental market.
This might not seem like the most natural place for a listing agent to be, but Martin took a look at his MLS and recognized that there were too many people that couldn’t afford to sell their homes at the prices the market was dictating. And since people were choosing not to sell, more than a quarter (27 percent) of his market consisted of rentals in 2011. That’s a stat that needs to be adapted to, stat. So Martin began to cater to rentals with the idea that these were people who’d likely list their house for sale down the road. As a result, his business listed 71 rentals in 2011.
Many agents actively avoid rentals. It can be just as much work as a traditional sale for a fraction of the income. But Martin saw a bigger opportunity beyond any present transaction. During a recent Agent Mountain interview, he shared that he has built a comprehensive database of properties that have rented in the current market, as well as a database of renters. “We are now making follow-up calls about nine months after the lease is signed to see if they’re ready to lease again or if they are going to put their house on the market … A good number of those sellers don’t want to rent.” They are ready to sell. In today’s topsy-turvy market, listing to rent may be a solid steppingstone toward a listing to sell. Now that Martin has the relationship with the seller, he has the inside track on future listings.
Likewise, in the process of helping people find rentals when they weren’t in a position to buy, Martin naturally established an entire database of future buyers. The current housing recession has generated unprecedented numbers of short sales and foreclosures. The vast majority of these homeowners became victims of the market and would normally be solid candidates for home purchases. As a result, the current crop of renters may have more potential for future home ownership than any before.
When the market shifted, Martin shifted with it. Rather than bemoaning the lack of eligible sellers, he pursued the opportunities the current market had to offer.
Now that’s adapting to the market of the moment. Has your market’s inventory disappeared? How are you adapting to the change?
Listen to Gary's interview with Martin, and get inspired to adapt today!