As the holiday season looms closer, rumors of a slowing real estate market continue to spread around metro Denver. In a recent survey of 1,000 local Realtors conducted by Lon Welsh, the near-consensus is that these rumors seem to be true: all types of buyers and sellers are just a little less active than usual.
This market slowdown may be alarming for some, especially those new to real estate. For the past three years, we have had the strongest seller’s market in Denver’s history. We know that the market had to slow down eventually (as Welsh says, “to make it more of a fair fight for the buyers”).
With over 600 agents, Your Castle Real Estate has a multitude of experts who have successfully maneuvered through more than one market cycle. We’ve gathered the best tips from our local experts on how agents can best navigate a down market:
How to transition seller mindset and set the right expectations.
Educate, educate, educate. Not only is this the (unofficial) motto for Your Castle, it’s one of the most crucial ingredients in a positive agent-client relationship. A good starting point is to provide clients with the fact slide tools, and use the talking points to help new clients get up to speed. The talking points are also great to leave behind, in case the client needs to review it later.
Ensure that you show the broad range of statistics over a market cycle, especially DOM. Historically speaking, homes have been selling twice as fast as a “normal strong economy” market. This means that the average for DOM should double in the next few years, and that is normal.
Coach that every showing matters. Regardless of home price or time of year, around 20-25% of deals fall out of contract. In a slow market, every showing is more important than the last – you want that first to close. To help clients prepare their home for showings, refer them to Your Castle’s list of best practices for Fall and Winter showings.
Get personal by sharing personal stories to illustrate these facts. Clients will appreciate the research you gave them, but they will remember the personal stories you share with them. This goes both ways – there is almost always an emotional “why” behind a transaction. Find your client’s true motivation
Your Marketing Checklist
Online shopping has become relentlessly popular, as 96% of Americans have made an online purchase in their life, 80% in the past month alone.
The real estate market is not exempt from this trend. When searching for a home, buyers start virtual showings online, and immediately deselect all properties that do not fit their criteria for “non-negotiables” such as size, price, or location.
After the initial selection process, most buyers find the same top two or three properties as the best value for their money in any given area. These same two or three properties then receive a majority of the offers, and new “top picks” frequently cycle in and out. This means that if you want to sell, your listing must be a top pick.
We have put together a Marketing Checklist full of techniques to help you strategize when a house does not sell the first weekend. You can find it here.
Updates to your verbal listing presentation.
During a market slowdown, it is more likely to be a highly competitive environment – even more so than during a booming market. As a listing agent, you will need to practice your presentation so it’s smooth and professional. In addition to this, you will also need to:
In a booming seller’s market, sellers are accustomed to being able to sell quickly, and being able to sell at a high price.
In a transitioning market (where we likely are now), sellers typically can either sell quickly for a higher price, or find a better price within a longer timeframe.
In a cold buyer’s market, pricing mistakes can be deadly. It is critical that a client understands these implications from the very beginning.
Be prepared for follow-ups.
The real estate market can be a very confusing place, especially for first-time sellers. As rumors a slowing market keep spreading, clients may begin to feel weary of listing their homes. Keep them motivated by making yourself available for all of the questions they may have, and keeping yourself in the back of their mind always by sending them a Stay In Touch package from our marketing team.
Be prepared to stay in touch after you list.
During slow periods in the market, the best practice is to touch base with sellers every week by giving them a weekly progress report and a recap of that week’s activity surrounding their listed home.
If clients do not hear from you weekly, they may assume you are doing nothing. Get back to basics by remembering to faithfully call your clients and update them. They will appreciate the honest and open communication, and it will also reassure them that you are working earnestly to sell their home.
Many of the prospects that you meet at listing and buyer appointments will not have the right motivation level to proceed… yet. However, if you stay earnest, many of those prospects will turn into signed deals.
The best kept secret in real estate is that prospecting “techniques” really do not change based on the current phase of the marketing cycle. The key is to simply do more prospecting. You will find that with time, patience, and a little extra GRIT, you can keep a steady stream of leads and prospects even as the market continues to slow.
How to explain this to your (worried) clients.
Your Castle Real Estate, founded in 2006, has successfully maneuvered through more than one economic cycle. We have seen similar trends in the past few election cycles, when showing traffic and sales volume slowed down for a few months. This election cycle, as we predicted, was no different.
Additionally, mortgage interest rates have gone up about 1% during the year. In the long term, mortgage rates are not linked to sales volume. But for a period of 6-9 months, there is a transition period when buyers slow down and get used to the “new normal”. For now, the market is slower than normal, but most buyers and sellers have not changed their plans to buy and sell this Spring.
Do you have any other tips or best practices for navigating a down market? Let us know how you have found success working with clients during a market slowdown in the comments below!