I am now in my 21st year of having a real estate license. In more than two decades, I’ve seen a lot of changes in the market…
I’ve seen the heydays of the mid-2000s, "The Great Recession of 2008-2010,” and the housing comeback that started in 2013, to name just a few.
I’ve seen spring markets that start in January and others not until April. I’ve seen robust fall markets and I’ve seen fall markets that taper.
Every market is becoming increasingly difficult to predict. The one constant in our business is that there will always be change. That’s why the brokers that are running the best businesses with the tightest, most consistent processes will win in every market, regardless of seasonality or peaks and troughs.
Differing markets do require a broker to adapt to differing conditions while maintaining consistent systems.
Seller’s Market (less than 4 months of inventory) requires a broker:
- …to understand how to find inventory before it hits the market.
- …to coach their buyers on how best to navigate multiple offers.
- …to understand the market to make sure their buyer does not overpay.
- …to help their sellers understand which opportunity is best for them.
- …to be really strategic with move-up buyers.
Buyer’s Market (more than 6 months of inventory) requires a broker:
- …to really understand the market. Buyers to not want to overpay and sellers want top dollar.
- …to be great at setting expectations on price with sellers. Every price drop feels like a loss to a seller.
- …to be a great communicator giving constant feedback to their sellers.
- …to be a terrific marketer and storyteller.
- …to be realistic. You will need to say no to some opportunities that come your way.
A normalized market (4 to 5 months of inventory) requires you to wear all hats. Currently, the entire MLS area in Chicago is sitting at 5.2 months of inventory. That puts us right in the middle of a “normalized” market and means that you will need to wear a lot of hats right now. You are going to need to adjust to meet everyone’s needs and recognize that they are vastly different from client to client.
You’ll have buyers that need to buy tomorrow or just wait until the right opportunity arises. You’ll have sellers that need to sell no matter the price and others that will put off their sale until they can get a target price. Some buyers and sellers will just decide to rent based on what they feel they can get at the moment.
As a seasoned relationship-based broker, it’s imperative that you listen to your clients as they tell you what they want to achieve and that you use your expertise, steeped in data, to guide them on the best path forward.
In some cases, you may need to tell them that this is not the right time to list or buy based on their goals. Doing so will garner more respect for you in the long run than just taking an overpriced listing that has no chance to sell at their price in the current market.
In a normalized to buyer’s market like today's, you are either overpriced or you are in the market. To sell, you need to be priced correctly or you will sit. If a seller wants to price above the market, build in predetermined price adjustments at the time of listing agreement. You as a broker need to spend your time working on what is going to be successful. Overpriced listings tend to lead to lost time, resources, and - most importantly - relationships. Your professional integrity and your expert assessment of liabilities and opportunities for your client – not for yourself – build lasting goodwill and the reputation that will drive your success.
As we go into this fall market, there is some real opportunity to be a standout broker. The definition of broker is a person who arranges transactions between a buyer and a seller for a commission. ‘Arrange’ is defined as putting things in a neat, attractive, and required order and adapting to that what was not originally specified.
This definition of ‘broker’ in its entirety means that you need to adapt from transaction to transaction, from market to market and from season to season. A successful broker uses his or her knowledge to put together a solution for the buyer and seller that might not have been obvious to anyone at the outset.
As we approach the beginning of a new season, focus on these takeaways:
- Be quick to adapt. Don’t think that an easier buyer’s market is around the corner. We probably won’t see a period like 2013 to 2017 for several years.
- There is as much or more opportunity in a normalized or buyer’s market than there is in a seller’s market.
- This is an opportunity to strengthen your personal market share. The market is looking for experts. Be one.
- Set expectations and say “no” to losers. Everything you say “yes” to means you are saying “no” to something else. Invest your “yes’s” in the opportunities that have a chance for success.
- Understand the market data better than your competitors. Do you know the "Market Time” and “Months of Supply” in your markets?
Finally, “Clear the Calculator” on any past market. Look at what is in front of you in this fall market, adjust accordingly, and WIN.
