We’re in a slow real estate market, I get that. The peak where I practice was 2005 when any Tom, Dick, or Jane could list and some dorky agent in the MLS would sell it. The rule was “List as many homes as you can, cold call, advertise, mail, whatever, but list and it will sell.” Badda bing, badda bang!
But let’s admit it, this market has dramatically changed how we play the game. We had about a dozen total closed transactions in my entire county last month, so there is almost no volume to speak of, and certainly not enough volume to keep 327 agents alive. Okay, 70% of those agents are practically dead, but that still leaves 98 agents clawing each other over the scraps.
Here’s the dilemma as I see it. Clients tend to be high maintenance these days. They are frustrated. They want to know what’s going on, why their neighbor sold their house in 10 minutes at full price, and explanations for 100 other mythological rumors. Listing maintenance is extremely time consuming, more so now than in many years. I applaud Chris’ 1.0 argument for going back to basics, and Jeff’s diplomatic affirmation, but my argument is that lots of listings may actually be a great way to go broke right now.
Okay, I admit I don’t have Jeff Brown’s IQ, Chris Johnson’s stamina, or Greg Swann’s common sense, but I am a genuine bald buy who spent some time in Arizona, and so I feel some affinity with these guys. Let’s just see how sharp these guys are. Yes, I’m looking for wisdom, and I’m dumb enough to admit that. But I think this is an issue that Realtors around the country are grappling with, and the answer has major implications for our clients.
Here we go: When it would take about 100 listings here (and many other places around the U.S.) to sell one house every other month, at least statistically, and when an agent cannot manage more than about 20 listings with such high maintenance clients right now, it seems to me an agent can easily go broke chasing listings in big numbers. First, there are hardly enough hours in the week, and secondly, the average listing must cost us $2,000 to $6,000 each over a period of the listing (not in a normal market, of course).
Assuming agents go out and knock on doors, cold call expireds and FSBO’s, send out mass mailings, and so on, and get lots of listings, is this really the profitable model right now? Very few of these listings are selling. This is a great way to spend 60 hours a week, a lot of money and stress, all to sell one house every two or three months, if you’re lucky. I’m watching several brokers who are about to go bankrupt, because this is exactly what they have been doing all these months during the slow down.
Or should we let other agents do all that listing and spend all that time and money, not to mention all the phone calls and emails with the clients, and should we just be trying to connect with buyers? This is a legitimate question. What say you guys? What are top producers doing that is working so well for them now? Any strong opinions on this subject? Let ‘er fly guys! I can take it. See what I’m doing at Sequim Real Estate.
Greg Swann says:
For the past two years, we have been progressively more cautious about the listings we will take. We want to make money, of course, but we also don’t want to lose money, so we won’t take a listing now unless absolutely everything is our way. We work a lot with buyers, and I do a lot with investors. As of the start of the year, we’re prospecting for listings in high-equity neighborhoods, but that’s just a toe in the water for now.
January 12, 2009 — 6:03 pm
Tom Hall says:
Great question Chuck. I approach that question just as I would like any other business that carries inventory.
Personally, I believe the dynamics of how agents/brokers provide value have changed. I am not sold on the prospecting rules of Chris and Jeff – I think agents need to be more consultative – not churn and burn. Just my view.
I am not actively seeking listings UNLESS sellers really get it. If they don’t recognize the market dynamics, I won’t waste my time.
Just a different perspective.
January 12, 2009 — 6:36 pm
Teri L says:
What if we choose door #3? Churn and burn through prospecting like BawldGuy and Genuine, but choose my prospects/neighborhoods very very carefully, and be willing to walk away from any seller that isn’t getting it. Just because someone wants to sell a house doesn’t mean that I have to be the one to list it.
I’ve referred 4 listings since Dec. These are investment properties that I personally don’t have the resources to sell, but I’m more than happy to help out a few sellers- who appreciate my honesty, and funnel that work to another agent who specializes in investment properties.
Lots of ways to skin cats.
January 12, 2009 — 7:05 pm
Tom Hall says:
Teri – you’ve left me speechless ;). Perfectly said.
January 12, 2009 — 7:15 pm
Debra Sinick says:
Just say, “no” to overpriced listings! Let someone else deal with them.
January 12, 2009 — 7:49 pm
Joshua Hanoud says:
I don’t even go on listing appointments unless the seller is reasonable about their pricing over the phone – I turn down 9 out of 10 listings before I meet the sellers in person because they want too much and aren’t willing to let go of the idea. I concentrate almost entirely on buyers right now – and I only put real time & gas into them when they’re qualified and serious about it. Anything else costs me too much time and money.
There are absolutely the larger agents around here who list 60-70 properties at a time and sell 2-4/month – but they have insane overhead compared to me, and I’m happy selling my 1-2/month with very little in the way of overhead…and the cool thing is that I’m growing – my business is building, but my overhead isn’t. I still feel like a new guy and far from an authority figure, but Lean & Mean is kinda neat.
January 12, 2009 — 8:31 pm
Tony Sena says:
The only listings we take are short sales and that’s because I have an agent that only handles short sales otherwise we wouldn’t take any listings. 92% of our closings last year were on the buyer side, so that tells me my business plan for 2009 still needs to focus on buyers!
January 12, 2009 — 11:30 pm
Tina Fountain says:
On listing appointments it’s our job to be honest with the sellers and give them the cold hard facts about market conditions and what their home will sell for. If they are unrealistic about the price, we’ve had to turn down the listing. Many times, 6 to 9 months later, we’ve ended up with the listing at a fair market price. Today’s buyers are looking for a deal and they are not willing to pay top dollar any longer.
January 13, 2009 — 3:34 am
Mike Taylor says:
Just echoing what others have said, it is imperative that you are ultra picky with what listings you choose take on or they will bleed you dry.
January 13, 2009 — 4:44 am
Richard C Mongler says:
I’ve noticed that while housing prices fall, rent isn’t falling.
January 13, 2009 — 4:56 am
genuinechris johnson says:
Look harder for better deals. that’s what prospecting. initiating a conversation doesn’t obligate you to taking junk deals.
January 13, 2009 — 5:20 am
J Boyer Harding NJ says:
Wow, 12 sold home listings in an entire county over a 12 month period. Now that is slow!!
In my Town / Township the general home seller and expired is complaining that nothing is selling. I try to tell them and show them that such thoughts are just not reality.
For my area, population about 40,000 people, and about 400 Realtors, there were about 430 sold listings in 2008. Now that is down about 20% from 2007 but hardly the general thought that nothing is selling.
I have become much more selective about what I will list, and I fully subscribe to the line of thought that the best return to a home seller is the return they can get by pricing their home such that it sells within the first 3 weeks on the market. If it does not sell in the first 3 weeks it is likely the home was 10% or more over priced.
January 13, 2009 — 7:15 am
Jeff Brown says:
Richard — “I’ve noticed that while housing prices fall, rent isn’t falling.”
In areas where homes didn’t sell, while owners walked away in droves, rents fell quite a bit. Those homes ended up on the market as rentals while owners faced reality and waited out the market. That rapid supply increase had the predictable impact — decreasing rents.
January 13, 2009 — 8:41 am
CompeteRealty says:
In the past year the market has drastically changed. That means that the way agents market themselves also needs to change. Agents need to go back and review how they are marketing themselves. Then they need to stick to what is working and cut out what is not.
The game has changed and so has the way you must market.
January 13, 2009 — 9:03 am
Jeff Brown says:
Chuck — Love this post if only because I’m sending it to Mom so she can see your line about my IQ. 🙂 I love to make her laugh.
High maintenance listing clients are like high maintenance women: They hafta be high maintenance (read: constant pain in the ass) because they know as well as you do their premise is bogus. They put the pressure on others to distract from the fact their prop is overpriced, or they’re the poster child for fishwife.
Chris’s M.O. is brilliant. He filters lists for folks much more likely to say ‘yes’ than ‘go to hell’. An example of that is a postcard mailing we’re about to launch. It’s a test, so we’re sending two differently worded cards to two groups, 1,000 in each one.
Those 2,000 recipients were culled from 60,000 local income prop owners. We wanted the ripest fruit, from the nearest trees, hanging low enough that we won’t even need to reach above our heads to pick ’em. How might you predict our batting average as we follow up those cards with ‘warm cards’?
Seems your real problem is not enough trees with nearly enough fruit, ripe and low hanging or not, right?
Consider doing what I did. Confronted with a market no longer making sense, I went national. You don’t have to go that far, but is there another kind of property in your town you might go after? Maybe the 2-4 unit market? Or maybe just those who own sfr’s as rentals? Those folks are always ready to sell or exchange, given the right reason. Surely there are plenty of those around with good reason.
Any thoughts?
January 13, 2009 — 9:13 am
Greenville SC Real Estate says:
Wow, a dozen closed transactions in 12 months!? I am so glad I live in an area that has remained relatively stable throughout this whole “downturn”. The number of existing homes sold was down 19% in 2008 compared to 2007, but what does anyone expect when 2 years ago someone with virtually no credit could get a loan? Those buyers are gone. Many other buyers are on the fence, since even our local news fails to report on our healthy market.
As for prices, our area never saw the insane appreciation that many other areas experienced, and over the past 12 months the average sale price of an existing home has increased by approximately 4.5%.
Regardless of those facts, the 1,071 active agents in our area have always had to work for a living. Not only is our median home price still slightly below $140,000, but our days on market has always averaged approximately 85 days. Fortunately the 8,427 residential properties sold in our MLS during 2008 probably kept them relatively busy.
January 13, 2009 — 12:12 pm
Greenville SC Real Estate says:
Correction: The number of active sales people is actually closer to 900 in our market.
January 13, 2009 — 12:22 pm
Chris Johnson says:
High maintenance listing clients are like high maintenance women: They hafta be high maintenance (read: constant pain in the ass) because they know as well as you do their premise is bogus. They put the pressure on others to distract from the fact their prop is overpriced, or they’re the poster child for fishwife.
>>>>>>>that is hilarious. Best thing I’ve read today. Makes it worth it, regardless of what I get, to be a bloodhound for another year.
January 13, 2009 — 12:41 pm
Patric Herber says:
Every area has agents with little to no activity, but are hungry for income. Why not recruit a couple of them as assistants, offer them a percentage of your commission on each sale that they assist with, allow them to handle the less important and often most time consuming tasks, while you continue to market 1.0 & 2.0, scraping every surrounding market for the best properties.
You would be able to cut your work load down tremendously and more than double your income on nothing more than sheer number of sales. Basically, you have to look at real estate like any other business and allow yourself the freedom of passing those less important projects on to people willing to do them.
Outsourcing has been the secret many companies millions, why, because it works.
January 13, 2009 — 2:47 pm
Kevin OBrien says:
I definitely think you are on the right track. The key in every market currently is finding qualified buyers. Most areas have over a 6 month supply of homes. The only way to clear things up is to start having buyers, that can actually qualify.
January 14, 2009 — 12:35 pm
Deryk | Alpharetta Georgia Real Estate says:
We handle a market area in North Atlanta. We resell through Keller Williams and property manage through our own brokerage. We went from a 50/50 Seller/Buyer ratio in 2006-07 to a 15/85 in 2008…..and down about 50% in volume over 2007. We cut back on some client touches, increased participation in online blogs, Trulia etc.
Aggressively working with any Buyer leads has helped us stay afloat. We have also experienced a huge surge in rental listings in past 60 days. There has been a good increase in qualified tenants to rent to as well. Rental and property management now makes up over 20% of our income. It is definitely filling in some income gaps and provides a good list of potential buyers and sellers for the future. The rental market here is starting to shift down now as we have built up so much rental inventory that there is downward pressure on rental pricing and almost double the market time to get a property rented. now. That can easily progress into a rental market so bad that Owners/Sellers find they are unable to find a tenant and end up in foreclosure…adding to resell inventory.
My wife works exclusively as our Buyer/Tenant agent. She is out in the market showing property almost every day. Clients can tell that she really knows the inventory here and they are drawn to her confidence that she can find them the right property. We have been very fortunate to get some great qualified Buyers and still have some that we are working with here in January. I think that will continue. There are many Buyers waiting on the sidelines for our Sellers to get out of denial and reduce their listing prices to something close to current market value. When they do this we often find the property gets multiple offers as buyers see so few “market priced” listings.
Another thing we are seeing is that, thanks to local media scaring the crap out of everyone over credit, Buyers are assuming that they can’t get a loan they are turning to renting to wait the market out. As we screen them for rental we find out that some of them can actually buy. We converted 3 renters to buyers in the past 90 days. We need to get the word out more that if a Buyer wants to get a primary residence, has good credit and money to put down, that they can definitely get a mortgage at an amazing rate. Investors on the other hand are finding fewer and fewer mortgage options with higher rates and many more restrictions. They are the ones getting squeezed and that is causing investment inventory to swell.
I do not pursue listings with the same aggression. I am brutally honest with Sellers about the current market and most of them appreciate the fact that I tell it like it is. If they can afford to list for a price that will sell, and understand that they need to have the property in perfect showing condition all the time, then I am willing to take them on. Otherwise I let them know that we just can’t help them or refer them out if I think someone else can. It has become VERY easy for me to just say NO to people I can’t help.
January 14, 2009 — 3:37 pm
Chuck Marunde says:
Thanks to all of you for GREAT feedback and wisdom on this issue of working with listings. Loved what you each shared. Good stuff! You gotta love this Bloodhound!
January 14, 2009 — 5:02 pm
Jim Gatos says:
1. work with an agency that allows you to capture your own buyer calls off your listings.
2. List a couple of sensibly priced homes that will attract calls..
3. Sell to as many of these buyers as possible.
Buyers won’t call you if you have nothing for them to call you about.
They will call you due to…
1. a referral from a past client or center of influence.
2. a listing you have
3. possibly from the internet for some sort of reason.
January 15, 2009 — 4:10 am
Valerie Crowell says:
I think our clients are spending too much time watching television news. It’s the big story and everyone’s talking about it here. I work for a big REO shop and we have tons of listings, priced right. If I had a nickel for every neighbor that wrung their hands when I told them our selling price I wouldn’t have to sell another house. They don’t get that our properties are discounted to reflect what you don’t get when ou buy one. I work the buyers.
If one more guy asks me if the market is going down or at the bottom or wants to wait on the market, I think I shall stab myself. I’m like a broken record. The fundamental precepts never change. If it is a home that they like and they can afford to live in and it makes sense for their family, that’s what counts. That worked in 1998, 2002, 2006 and it works today. The people who are standing on the sidelines because they think it’s still going down are the same people who thought it would never stop going up. They’ll never understand the market no matter how well you present to them and they’ll continue to get whacked in the market because they continue to listen to guy on Channel 7.
January 15, 2009 — 9:08 am
Budi Waluyo says:
Is he circumstances so difficult up there ? I’m so sorry that there is no sign to economic remedy so far. Surviving seem to be the only thing we can do.
January 16, 2009 — 4:10 pm
Dennis says:
That is a brilliant strategy working the neighborhoods that have many years of stability and history (and equity) and not the last 5 year (buyers now sellers)who are struggling.
January 19, 2009 — 5:56 am
leanne finlay says:
Hi Chuck, it’s always good to be the third listing agent, by then the sellers are really ready to listen to your advice.
Price and condition are key, but so are terms. Especially in the jumbo loan category — if a seller can carry a Note & DOT for a portion of his equity, that might be a more saleable property. I know in rural areas, many sellers who have equity and are thinking of retirement might well be able to carry a substantial portion of their equity for 5 years or so, and appreciate a 6 or 7 or even 8% interest rate.
And, an individual seller may well be more flexible for a particular buyer than any lender these days.
January 20, 2009 — 9:12 pm
Jose Lopez says:
You have to be picky in this market with listings. I am getting ready to start chasing down short sale properties. You do not have to argue with sellers to drop a price, but you do argue with banks. I guess you have to take the good with the bad.
Sarasota Florida Foreclosures
February 3, 2009 — 9:02 pm