New Construction Start(s) Me Up!

Construction Real Estate New Homes

We’ve all heard of the Rolling Stones and Mick Jagger.  I don’t know if you have to be a person of a certain age, a fan of the Rolling Stones, or just hip and wise beyond your years.  But if you don’t automatically start singing (the lyrics you think you know) when ‘Start Me Up!’ comes on, are you really part of the fabric of humanity?  That’s debatable, depending on your circle of friends and your ability to stick your tongue out and wear skinny pants on stage.   Okay, that might be a bit too far.

The What

What connected me to immediately to Mick Jagger was the reporting I read on both the census website, as well as www.tradingeconomics.com.  Vitally important to your ability to make homeowners’ dreams come true is the supply of homes.  A subset of that supply is new construction.  And according to both of those sources I noted above, new construction [housing] starts are lagging in 2022.  Before we go too far, according to www.Investopedia.com (clever name), housing starts are defined as, “the start of construction on a new residential housing unit.”  For your purposes, just have an image of a single-family home in mind as you take in this article.  

“Privately‐owned housing starts in June were at a seasonally adjusted annual rate of 1,559,000,” per www.census.gov.  “This is 2.0 percent (±9.0 percent)* below the revised May estimate of 1,591,000 and is 6.3 percent (±10.2 percent)* below the June 2021 rate of 1,664,000.”  They used a lot of words to tell us what we already know: new homes are hard to come by.  Those were the latest stats through June of this year.  And it doesn’t look like that trend is going to reverse itself in the very near future. 

The When

As in ‘when will housing starts begin to tick upward?’…  That is actually very much up in the air.  It’s a waiting game, honestly, and there are a number of factors that we just can’t influence.  It’s a long game, to be sure.  “Housing starts in the US dropped 2% month-over-month to an annualized rate of 1.559 million units in June of 2022, the lowest since September last year.”  Will the recent passing of legislation tied to the Inflation Reduction act be impactful?  Will there be a sense of economic improvement that makes its way to housing, ultimately impacting the market, supply & demand, and mortgage rates?  We’ll see.  

The Conclusion

Although I’m fairly certain there is subtext in Mick Jagger’s lyrics that isn’t suitable for all audiences, one thing he writes (with respect to the real estate market in 2022) rings absolutely true: “You make a grown man cry.”  

Research:

https://tradingeconomics.com/united-states/housing-starts

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

https://leadingbuilders.org/wp-content/uploads/2020/07/Residential-Construction-Economic-Study-5-2020.pdf

Home Staging 101

Home Staging Ideas

Staging: Helpful or Hassle?

One of those quotes we’re accustomed to seeing – and using – doesn’t exactly mean what we think it does when it spills out of our mouths.  “All the world’s a stage,” really speaks to the world being a stage show, and all humans are simply actors; everyone has a role, everyone has a part.  Well, in the world of real estate, all the world really IS a stage.  And it reveals itself, most often once you push open that front door and let happenstance (read: fate) take over.

The What

We are all aware of the ‘varied’ tastes and decorating abilities exhibited by clients and homeowners.  At times, we’ve wondered aloud about their ability to dress themselves and find their way to work.  Stepping into a home with a mishmash of design sensibilities and execution is as off-putting for your client as it is detrimental for the homeowner to find their way to a quick sell.  Not everyone has the talent or imagination for highlighting specific aspects of their home which can go a long way in doing the work for you.  An integral part of preparing a home for sale can be ‘staging’, or doing everything and anything you can to enhance the visual appeal, as well as create a basis for the perfect buyer (e.g., someone with design imagination and the willingness to make changes post-sale).

The When

Not everyone is going to have the budget to replace furniture or paint multiple rooms or make repairs to obvious areas in need of some TLC.  Your client doesn’t have change everything about their home, but they need to understand and have a willingness, at the front end of the selling process, to absorb the fact that the pink walls in the dining room need to go, or that an extensive ‘editing’ of the knick-knacks will showcase those special parts of a room or the home that are enticing to buyers.  Don’t wait until there have been two or three or four showings with frowns and sighs and negative feedback.  Time is of the essence, and the sooner you can make your ‘product’ more appealing, the less time (hopefully) there will be between a showing and a contract.

The How

I poked around and found a great article (https://frederickrealestateonline.com/decorating-staging-trends-2022/) listing TEN staging ideas a seller can consider when getting their home ready for sale.  I don’t agree with all of them.  For example, “The New Modern. As more people become digital nomads, that trend is influencing our tastes, whether we even travel or not. We are exposed to the world in a way that was never possible before. Can you have a maximalist design that incorporates zen, minimalism, and neutrals? Yes, you can…you can have it all.”  Zen?  Maybe.  

I think most people would prefer a calming paint color, or the furniture arranged smartly, in a way that lets them imagine themselves living in the home.   As with any ‘Best Ideas’ lists, you have to read the room, right?  And as a real estate professional considering the ‘staging’ conversation, you need to take into consideration those ideas which your seller can legitimately afford, those for which they have a true interest, and whatever helps move that needle, gets the showings, and ultimately helps get all parties to the closing table.  Period.

Research:

https://literarydevices.net/all-the-worlds-a-stage

https://frederickrealestateonline.com/decorating-staging-trends-2022

Home Buying vs Selling Whiplash

Buying vs Selling House

It Costs HOW MUCH?!

Only a few, short months ago the refrain coming from excited homeowners was, “I can’t afford NOT to sell my house.”  Remember?  The prices were absolutely stratospheric across markets, regions, and socio-economic quadrants.  It would seem, though, that what we’re hearing now is pretty much the opposite: “I can’t afford to sell my house.”  If they do sell, where are they going to go?  What can they legitimately afford?  Whiplash, anyone?

The What

You can slice this up any way you see fit, really.  We looked at several sources to make a determination about the most impactful criteria homeowners are dealing with in today’s market.  The struggle is real, the TikTok experts’ seminal advice, notwithstanding.  The barrier to entry boils down to price.  The cost for single-family homes (and apartment, condos, townhouses, and multi-family units, etc.) has quickly outpaced what people can afford.  Is it the economy’s nosedive?  Is it too much inventory that didn’t sell during the boom?  Is it stagnant wages, the war in Ukraine, or insurance costs, or ‘you name the reason and you’re probably correct’?

The When

Tabitha Mazzara, director of operations at Mortgage Bank of California, says don’t wait (www.forbes.com).  Prices aren’t likely to drop dramatically at the exact moment you think you’re going to be ready to buy.  “If you’re waiting for prices to suddenly plummet to what they were in the past, you’re making a mistake.”  Honestly, if you need a home, don’t want to rent, and are ready to pull the trigger, just do it.  The search for something you can afford/love/learn to love might be a little tricky – and lengthy – but time is of the essence.  Right now, there is a very large percentage of home seekers literally between a rock (no inventory they can afford) and a hard place (the interest rate monster).  Says Tabitha, “The Fed has promised another interest rate boost. If you’re ready to buy, don’t wait because prices aren’t headed dramatically downwards to what our parents paid. Things might dip a bit, but there’s no cliff dive that’s going to happen.”

Conclusion

Naturally, a homeowner/home seeker is only going to be able to do/afford what they can.  As a real estate professional, you’re no doubt being overrun with calls and emails and texts from prospects in this very same, and very real boat.  As always, it’s a bad look to start working with a client who isn’t verified and cross-checked.  They need to know precisely what they can afford, yes.  But they also need to be approved and they need to understand that you all could be in this for the long haul.  Take a breath, ensure open channels of communication, and maybe a little yoga to smooth out the road.  They’ll find a home, they’ll think you’re a superstar, and you can move on to the next home seeker in need.

Research:

https://www.forbes.com/advisor/mortgages/real-estate/housing-market-predictions
https://myhome.freddiemac.com/resources/calculators/how-much-can-you-afford 

5 Ways to Close More Real Estate Transactions this Year

Sell More Real Estate Sold

We want more leads.  We want more contracts.  We want more closings.  As Real Estate professionals, often living and dying by commissions, getting to the closing table successfully and with as little pain as possible is our goal.  We can write as many contracts as we want, but if they are never ‘consummated’, they’re as useless as the paper (or pdf) they’re written on.

How to Close More Transactions and Get More Listings in 2022

Moving your client through the process is unique for them all; no two experiences are exactly alike, but they always share nuances and have similarities you can use to your advantage.  Getting to a ‘close’ should be enjoyable, not anxiety-inducing.  How can you get there with less stress, more often, and more profitably?  Here are five great ideas to help you do just that:

  1. Know Your Customer – One sure fire way to never get to the closing table is by not understanding everything you can about your client.  In that first conversation, not only should they be interviewing you, but you should be doing the same to them.  Forging a great working relationship will require you know their background, their budget, their strategies, how many agents they might have had before you, etc.

  2. Negotiate – Be it a sale or a purchase, there is still a lot of work to be done to get to the final stage, closing the deal and signing the documents to transfer ownership.  “Most negotiations have to be balanced, reasonable, and equitable for them to work out — otherwise one or both of the parties would walk away.” (www.carealtytraining.com) Come to the negotiating table fully prepared, commit to a floor/ceiling/conditions, and stick as closely to that line in the sand as you can without jeopardizing the deal. 

  3. Identify & Implement (the best closing strategy) – Direct, Soft, Hard/Hammer Close options play a role in how the process moves along toward pen and ink.  ABC (Always Be Closing) should live in your head rent-free.  In short order, you’ll get a sense for how to approach the close: tough and direct, an attempt to feel out the seller/agent and biding your time, or by putting your foot down and giving an ultimatum.  The desired result of the strategies, of course, is a positive response from the other side.  There’s nothing wrong with starting the closing process as early as possible.  But the earlier you identify the best method to elicit a favorable response, the better!

  4. Get an Inspection – Never enter into a possible sale without ensuring you know what you’re buying.  Conversely, it’s always a good idea to know what you’re selling to prevent a deal-killer from popping up at the last minute.  Hidden problems can quickly turn into money pits, nightmares, and enormous cases of buyer’s/seller’s remorse.  Don’t put your client in that position.  Knowing up front what issues need to be tackled, as revealed by a quality home inspection service, and what it might cost to repair them is critical.  Not all problems negate a sale, and some issues can be worked into (or out of) the sale price.  But knowing what they are sooner than later is half the battle.

  5. (Buyer should…) Present a knockout offer – Can you name many more things that get a seller excited about entering in a contract to unload their home other than a fantastic offer?  Coming as close to what both parties want can be trying, but when done correctly (and timely) you’re bound to decrease the time it takes to get to the signing table.  Make sure your client has their finances in order (approved), make sure to work with the seller, and offer terms they’ll appreciate – while protecting your interests (and wallet) at the same time. (www.thanmerrill.com)

Congratulations, you’ve got a fish on the hook (as it were), and you’re putting yourself and your client in position to close the deal.  You want to capitalize on the time you’ve invested helping buy or sell a property, you want to get in and get out, and you want to repeat with the next client. 

With as many ways as there are to get to close, there are even MORE ways to design the perfect real estate postcard campaign to get you noticed.  Drive engagement.  Drives lead generation.  Drives contacts.  Drives sales. 

What 2022 Looks Like for Local Real Estate Agents

REALTORS® Get Ready For A Wild 2022

Looking back on the real estate market in 2021, it was akin to scenes in movies (picture an alien invasion or some land rush in a western) where entire families, belongings in hand, are running down the street, away from their homes and off into chaos.  These folks weren’t escaping a monster from outer space or trying to lay claim to the back 40, no.  They were bolting from the homes they’d just sold – in many cases – for upwards of tens of thousands of dollars over ask. 

What might that kind of (recent) history foretell where 2022 is concerned? And how should we look to the past as a bellwether for what local agents can expect as the calendar rolls over to the New Year?  Pitfalls and triumphs, alike, will be had, yes.  But where, how, when, and what will be the best ways to be prosperous?

Seller’s Market

Kelly Melcher, from Opendoor.com, believes,” The seller’s market will continue into the 2022 spring homebuying season.”  She also thinks it will be less competitive than the year before, which is great for buyers, but still relatively optimistic for anyone wanting to sell.  Agents representing clients in 2022 are going to continue the search for inventory.  Marketing to (or identifying) geographic farms will increase or become more targeted.  And there will be a reliance on ensuring homes that do find their way to the market are in tip-top shape; the preparation not only cuts down time on market, but it also dramatically cuts away any fluff tied up in contingencies and things that could have been caught (and fixed) with an inspection.

Buyer’s Agent

“It’s really the severe shortage of homes for sale relative to demand,” says Odeta Kushi, “that will be the primary driver of continued positive house price growth.”  As the deputy chief economist at First American Financial Corporation, she knows a thing or two about the impact on the housing market.  There should be light around the corner, though, and as a buyer’s agent, it will be imperative to watch the pace at which home price appreciation begins to eventually taper off.  In the short-term, however, and given available inventory, it’s expected that ‘what I want versus what I can afford’ should still be at odds with specific target markets (e.g., Millennials and first-time buyers) looking for something to purchase.  In other words, prices might stabilize (don’t quote us on that), but the available inventory should remain relatively thin.

The Trends

RisMedia has offered up these great trends to watch in 2022, and we think they’re spot-on in many ways:

  • Affordability – This is truly going to be a “mixed bag as mortgage rates continue to climb and home prices rise.  Realtor.com® expects income to grow 3.3% by year end and unemployment to continue declining from a projected 4.8% in the last three months of 2021 to 3.5% during the same time-period in 2022.”  Depending on how closely these predictions come to reality, mortgage rates will still be volatile, and buyers will want to hop on low rates (pre-emptively understanding their credit rating and the amounts for which they can be pre-approved] early and check multiple outlets before taking a hit on their credit.
  • The ‘Burbs – Neighborhoods away from uptown/downtown centers “will become increasingly popular compared to big urban metros as home shoppers search for more space—a trend brought on by the pandemic. However, as demand is expected to outpace new construction growth, buyers may have to sacrifice space due to affordably constraints.”  The key here is to make sure buyers don’t make a bad deal just to get out of the drag of uptown/downtown because the siren’s song of backyard BBQs and pool parties beckons. 
  • Hispanic Homeownership – This segment of the population and their need for housing is predicted to rise in 2022, driving housing demand and impacting the homeownership rate for years to come. Realtor.com revealed that 1 in every 10 recent homebuyers is of Hispanic or Latino origin.  [NOTE: Per the 2020 United States Census, The Hispanic or Latino population grew from 50.5 million (16.3% of the U.S. population) in 2010 to 62.1 million (18.7%) in 2020.]

Conclusion

It doesn’t seem as though there are going to be any easier or more difficult opportunities when it comes to selling or buying real estate in 2022.  This business experiences peaks and valleys like other industries. 

The difference is there is often a near-immediate recognition of trends.  That, alone, gives real estate agents the ability to adjust their intake of facts, how they react to movements in the market (and real estate marketing) and to put plans in place to capture success!

https://time.com/nextadvisor/mortgages/mortgage-news/sping-2022-housing-market-predictions

https://www.rismedia.com/2021/12/01/forecast-2022-real-estate-market-mixed-bag

https://www.realtor.com/research/2022-national-housing-forecast

https://www.census.gov/library/stories/2021/08/improved-race-ethnicity-measures-reveal-united-states-population-much-more-multiracial.htm

How to Handle Multiple Offers on a House


Multiple Offers On The Same House

“Shut up and take my money!”  That’s a funny retort you might see on social media platforms when they’re advertising something so amazing, so ‘must have’ it defies the ability to negotiate.

The same can be said when it comes to today’s housing market and the oft-waged battle of ‘multiple offers’.  Clients have found the perfect home, they want it yesterday, and the only thing they want is for the seller to take their money.  Problem is, so do the 10, 15, or 20 other people on the list – who’ve made increasingly enticing offers – for the same property.

Because it’s entirely possible that you can represent both sides of that coin today (an inspired buyer and a confident seller), let’s look at what multiple offers can mean for each type of client.

Putting Your Buyer’s Best Foot Forward

Buyers are no doubt going to be extremely motivated to find that perfect home.  Either frantically or diligently (depending on the market), you’ve tackled the first issue and found something they’ve fallen in love with.  Now, the offer….

  • Bring Cash – “Buying a house ‘with cash’ can benefit both the buyer and the seller with a faster closing process than with a mortgage loan.” – Rocket Mortgage.  It’s so atypical, though, that roughly 87% of purchases are financed.  Of course, we all know that buying a home with cash isn’t possible for a lot of folks, but it can vault your client ahead of someone relying on being approved for a loan – even if your offer is lower.
  • Get Pre-approved – There’s nothing worse than your client finding what they want, and then not being able to actually PAY for it.  Know going in what they can afford, and where to stop negotiating.
  • Counter – Stay in the game as deeply as you can without overplaying your hand.  Some of those other offers will die on the vine or they’ll be eclipsed by continuous updates.  “Some buyers will be turned off by the aggressive negotiation strategy and walk away from the situation.”  Use their apathy to your advantage, and be patient.

Eenie, Meenie, Miney, Mo

The seller has found themselves in a position that is both enviable, and delicate.  Lots of people are putting their homes on the market, and in short order receiving the kind of offers they might not have imagined.  How to pick the winner?

  • Earnest Money – Get it.  No matter how good a deal might look on paper, any number of pitfalls can tank a deal.  “The higher the [EMD], the stronger the offer.”  It behooves you to sell when the market is hot.  If the deal on the table falls through, the EMD (1%-3% of the home’s price) can be a consolation prize for the homeowner and buoy them as you re-list – or contact a previous offer to inquire about their interest.
  • Contingent, Contingent, Contingent – Play contingencies to your advantage and walk away from the unreasonable.  Title, sale, appraisal, financing, & home inspection…all of them add to the uncertainty of a quick sale if the buyer’s plan or financing or whatever runs afoul. 
  • Evaluate – There’s a great deal of importance placed on understanding the entirety of an offer, versus just picking the highest price.  Yes, you want the homeowner to get the absolute highest price that’s ethically obtainable.  But making sure the entirety of the deal (from down payment, to how the home will be purchased, to waiving off crazy requests for either time or contents of the home or post-sale extras) is paramount. 

Selling a home $100,000 over ask is a great problem to have, especially if you’ve waded through a ton of competing offers to get there.  Similarly, beating out the competition for a prized piece of real estate by offering $100,000 over ask can be great (although I feel a little faint at that kind of overvaluation, even by today’s standards). Using platforms that allow you to automate your real estate postcard marketing campaigns can allow you more time to focus on your clients needs.

Multiple offers on a home can be viewed as a double-edged sword, depending on what side of the blade you happen to find yourself.  Thoughtful approaches to both buying and selling in the case of multiple offers can be exhilarating.

There is a ‘bubble’ for every commodity, and at some point the market will cool down and the craze of multiple offers will diminish (it will never be eliminated).  “Realtor.com reports that while new listings are still well below the number of homes placed on the market in early 2020, the gap is beginning to shrink. For the week ended March 20, new listings were down 14 percent compared with that same week in 2020, which is a smaller gap than the 24 percent reported the previous week. Still, Realtor.com reports that because homes are selling fast and fewer homes are being listed for sale, the total number of homes for sale (including new listings and previously available homes) is 52 percent lower than in 2020.”

Resource Links:

https://www.homelight.com/blog/multiple-offers-on-a-house/

https://www.nar.realtor/about-nar/policies/professional-standards-and-code-of-ethics/a-buyers-and-sellers-guide-to-multiple-offer-negotiations

https://www.washingtonpost.com/business/2021/04/14/buyers-2021-need-more-cash-face-more-competition/

https://www.rocketmortgage.com/learn/buying-a-house-with-cash

Sphere of Influence Real Estate Marketing

Getting Listings Sold Sphere of Influence Marketing

If you remember the standard catch-phrase tied inextricably to real estate, I want you shout it out with me: Location, Location, Location!  Exactly. 

While there are several definitions often batted about, the most powerful meaning assigned to this cliché is the perception that even the most horrid home or building is a prize if only standing in the right location.  One person’s trash, and all that. 

But is that still true?  Was it ever true?  You can have the best structure in the best part of town, for the best price, but if nobody knows about it, your chances of moving that inventory decrease significantly as the month wears on.  What we should be concerned with is something much more powerful than location.  You need to be building your Sphere of Influence!

Six Degrees of Separation

What is your Sphere of Influence (SOI) and how do you best capitalize on it?  Put simply, it is everybody you know.  And the people they know.  And so on.  Technically, you have and can maintain more than one SOI (e.g., LinkedIn has degrees of mutual connection), and doing so only seeks to improve your sales success:

  • 82% of all real estate transactions are the result of contacts from previous clients, referrals, friends, family, and personal contacts1.
  • 74% of buyers would use their agent again or recommend them to others1
  • 84% of consumers say they trust recommendations from family, friends, and colleagues, making peer recommendations the highest-ranked information source in trustworthiness1.

“Agents making more than $100,000 a year told the NAR that they got nearly one-third of their business from referrals from past clients. They got 34 percent from repeat business2.”

There is an allure in using, and a science to cultivating, an SOI to your financial advantage.  Common lore would have us believe that everyone in the world is connected by no fewer than six people3.  That means there is, inherently, the potential for both positive and negative interaction throughout your SOI, which can also play into your opportunities for success. 

A Fishbowl Named Wanda (of Business Cards)

Knowing that you have an SOI, and putting it to use are two completely separate animals.  The advent of social media has helped tremendously in terms of enlarging the pool of people to whom you are connected (be it personally, or tangentially based on commonality of acquaintance).  At the outset, you need to collect and categorize your list – and preferably in one place (e.g., an Excel spreadsheet or some kind of sortable database, ala MS Access). 

Create categories for corralling your friends and family, suppliers of goods/services (doctor, lawyer, HVAC repair, home renovation contacts, etc.).  You’ll also want to separate past potential buyers and sellers4.  You never know when someone who wasn’t in the market previously might be the exact person for the exact property you’re currently marketing.  The only thing left is to start reaching out to them the way that feels most natural for your connection, whether your call your uncle, share posts with your current lead list via Facebook or Instagram, or you text your favorite home inspection agent.  The key is to be short, polite, and memorable for the right reason. 

The goal is to make sure you’re top of mind when they hear of opportunities which would be good for your business.

Hidden Figures

In the 70s, the Yellow Pages were marketed by the slogan, “Let your fingers do the walking.”  It alluded to how much easier it was to use their directory of business versus doing the research on your own5.  Well, an SOI is much the same.  Location, location, location may still be important, yes.  But without a well-groomed and participatory network, you run the risk of watching opportunity pass you by. 

Create your network, and use it to your advantage.  Don’t be afraid to expand your Spheres of Influence and include individuals (and even companies) outside your norm.  Gems are found in most unlikely of places from time to time.  Your usage of and dedication to your SOI could prove to be a powerful tool in your bag.  The best part is that very often, that tool is hiding in plain sight.  

Research:

https://www.zipperagent.com/real-estate-sphere-of-influence-best-marketing-referral-engine/ (1)

https://www.easyagentpro.com/blog/real-estate-sphere-of-influence/ (2)

https://en.wikipedia.org/wiki/Six_degrees_of_separation (3)

https://www.thebalancesmb.com/jumpstart-your-real-estate-sphere-of-influence-soi-2866386 (4)

https://baerpm.com/2012/01/06/flashback-friday-let-your-fingers-do-the-walking/# (5)