Basic Strategies For Survival In A Slow Market

I know there are plenty of books out there on the topic of success, motivation and even techniques and strategies a realtor can employ to make it through, but nothing out there can prepare any real estate agent for what is coming. In order to be ready for the possible impending disaster, a real estate agent must have a few specific skills:

1. Know how to negotiate short sales.

2. Find buyers for listings.

3. Get the most out of marketing dollars. To aid in navigating these tough waters we must first understand what is causing them.

There are more than a few causes to the current conditions, but each one does seem to be aggravating the conditions in its own way. It would seem that most of the buyers that were buying a few years ago, simply are not interested in buying right now. With population ever increasing, demand for homes should be ever increasing as well. Factoring in the multiplication on demand that social influences, such as high divorce rates have, demand should be a very minor concern. That, however, doesn't appear to be the case. Why is this?

Part of the explanation is inflation caused by speculators. Up until a few years ago, so called investors could simply buy a house/rental based on their willingness to sign the documents. This allowed an artificial source of demand. With this influence left unchecked, one person could buy three or four houses and not occupy any of them. Couple the higher rates of default in non-owner occupied homes, this seems to show a very disastrous scenario. As more and more homes were purchased by investors and renters seemed to be rarer and rarer, many rentals were left vacant and eventually returned to the market in the form of REO or foreclosure properties. Now, couple that with a decrease in price and you have an unavoidable short-sale situation, ala today's market. As these rentals return to either the bank or are occupied by owners and get absorbed they drive down the prices and stretch days on market statistics for conventional sales. After all, who would buy a home at the conventional sales price when a home of similar condition and size may be purchased for 10 percent less.

A second part of the reduced sales numbers can be traced back to the kind and amount of loan product in the market place right now. Where buyers could get 100% financing a few years ago, and could purchase them on loans with introductory teaser rates, that flexibility no longer exists on the mortgage market. Most loan products out there right now are up to about 95% loan to value, where they really should have been the entire time, and may require even more equity in the purchase than that. Now, the buyers out there that can qualify for the loan programs are going to look for the best deal they can get and many buy the short sales that are on the market, displacing conventional sales, again driving down prices. As prices decrease, banks get even more conservative with their loan programs, making even fewer buyers, perpetuating the market's downward spiral.

With this market analysis complete, the question remains, how can a realtor make a living in a market like this? The compound answer is simple; learn to use it to their advantage. That is to say, learn to negotiate short sales and sell them, since they are the majority of inventory that is moving. Sage advice seems to indicate that any agent interested in learning how to negotiate short sales can learn how to do it from the lenders, from seminars or even from investors who are already doing it. The best way is to learn from a professional in a seminar. The price paid to attend the seminar may return in spades, given the skill is so uncommon today and may give any realtor an edge.

The next step necessary for a realtor to survive this slow market is to find buyers for your own listings. The most convenient way to do this is to use media as much as possible and team up with lenders for mutual marketing whenever possible to multiply marketing funds. Banks will usually pay 5% and sometimes the full 6% to agents handling their short sales so it is definitely worth it to find your own buyers. Getting them qualified may be the most difficult part of the process.

The third step is to get the most out of your marketing dollars. As previously mentioned, mutual marketing is a great way to stretch marketing funds. In this technique a realtor may team up with a loan officer and contribute to a fund in common used to purchase marketing space or time. Loan officers will frequently gladly accept the invitation to get whatever marketing they can. Another excellent way to stretch your marketing money is to use less than prime radio or TV time which can frequently be purchased at a deep discount. An additional way to affordably market is to design and publish your own real estate newsletter and sell ad space to various associated professions. The selling agent would be the featured article writer, of course.

Although working short sales, working hard to locate your own buyers and finding willing participants to share in marketing are each much more work than what most realtors had grown accustomed to over the past few years, they are all strategies which could make success a reality and help fight off the specter facing many in the current market.

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Gavin King is the Designated Broker of Realty In Idaho, a real estate developer, and a builder in the Boise, Idaho area. For more information visit us at http://www.RealtyInIdaho.com