“It should not be.” There is no worse swear word in real estate. Buyers often say that “it shouldn’t be” when a deal is lost. Sometimes it’s good to have a line in the sand as there is usually another house popping up just around the corner. But this market is different.
At the moment we are in an extreme sellers’ market. There are many reasons for that. COVID-19 was like an earthquake and the market has settled differently than before, although some things may already have been in play. You have to go over what is going on, why it is happening, and what to do to win a deal.
The goal is that you never miss a home and that your customers don’t burn their hands on the stove. There just isn’t enough inventory to mess around with.
By being educated and prepared with the right strategies, we can avoid saying that it shouldn’t and instead say that the house we just secured should be. Here are 18 strategies for winning deals in a hyper-extreme seller’s markets.
1. Prepare the client
Make sure you schedule an in-person or Zoom meeting to discuss this topic. Then write a written email. It takes people time to understand how difficult this market is and to understand all of the strategies that are currently available to them.
A couple of things that have changed: the pandemic restructuring of where we want to live, opportunities to work from home, new appreciation of the home, new space requirements, low prices, less market supply, individual market supply (our northeast corridor from Palm Beach County is expanding, but demand from the people moving here is accelerating), more stimulus and savings in the economy, to name a few.
2. Understand the market
Go through the national statistics. This includes the National Association of Realtors (NAR), your local market, and other statistics that include, for example, the rise in prices. Then break it down locally by district and neighborhood subdivision / building statistics.
Make sure your buyers understand the complexities of this market to make them nimble. The economy will eventually level itself out and people’s spending habits will go back to normal when things open up after the pandemic. Inflation is possible. In addition, some construction companies stop production because the cost of materials, namely wood and labor, is increasing.
Set realistic expectations with buyers about how fast this market will flash. We all have these horror stories of losing deals. Use them when necessary.
3. Share sources
Share serious journalistic articles from home and abroad with your customers. Outlets like Inman, Bloomberg, the Wall Street Journal, CNN, and your local publications (Palm Beach Post for me) have great reports to help your customers understand the market.
Some buyers tend to believe that their agents just want the sale. That said, the more they read about what’s happening from sources they trust, the more likely they will be prepared and listen to your advice.
4. Give customers what they want
Marshall Field, the department store owner, won over customers by coming back again and again with the motto: “Give the lady what she wants.”
When talking to the listing agent, you need to understand what the customer wants. Price matters, but there are other things – like a flexible deadline and an offer to take care of unwanted old furniture – that are also important.
5. Pay the ready-to-use costs!
In our market, the seller pays most of the closing costs. Offer your buyer to pay for this. Anyone can enter for full price (and even a little more), but sometimes an additional factor that costs less money and can be a differentiator stands out.
6. Escalation clause: price
This is like a reverse price guarantee. Include in writing a clause that by a certain date your customers will agree to a $ 1,000 offer in good faith. We only did this at a full price offer. The deal was closed for $ 640,000, but we put in a $ 20,000 escalator clause for $ 660,000 – and we won the deal.
7. Escalation Clause: Date
It’s the same idea here, but instead offer deadline flexibility. If the sellers want to move the deadline up or down, they must notify us in good time.
This works when your buyer has that flexibility and allows sellers to shop for something else with an unknown timeframe.
8. Large deposits
In this highly competitive market, the days of 3 percent decline are over. Come in with 10 percent or more. I’ve seen 25 percent and even 100 percent prepaid.
9. Don’t miss out!
Think big. In a multi-offer situation, don’t go up $ 1,000 or 1 percent more. Often buyers have to come with 5-10 percent more than they ask.
10. The early bird gets the sale
Schedule performances as early as possible. We pushed for an appointment at 8 a.m. and sat down at 9 a.m. We wrote down the offer early in the morning before others had a chance to get in. All in all, hours – and even minutes – matter in this market.
11. Cancel golf and bridge
We lost a deal because our buyer insisted on playing golf. His wife will never let him forget this round! Play your round after the show.
12. Be nice to everyone involved
You and your customer have to assert yourself, but do nothing to deter the listing agent. Of course, that should go without saying. A buyer who tells the seller to consume a pound of salt is just leaving you and your customer with a lot of salt.
13. Shorter inspection times
In our market, the standard inspection period is 15 days. It is often reduced to 10 days. Our inspection times are currently around five to seven days.
14. Bring your broker
You need to think through every deal and have your broker call your client on the phone. A change of pace and a different voice shows that you care – and sometimes it is required. Every thought has to be played out. At the moment I am heavily involved in a lot of business with my agents.
15. Mortgages: Keep Them Local
Your clients should use a local mortgage broker who knows the local market, answers the phone and text you within a few hours. Fixed loan approvals must be in 10 days instead of 30 days to compete with cash.
16. Write it down in writing
Every offer must be made in writing. Don’t be lazy here. People think about things and take them seriously when they write. It’s never a deal unless it’s in writing.
17. Super fast acceptance times
Do not offer offers with a day to think about (or the 48 hour market failure for counter-offers). If you write a quote in the morning, do it well by 5pm
If it’s later in the day, do the acceptance time the next morning at 10 a.m. You have to fear that another deal will come about. Time is not your friend.
18. Have a growth philosophy
In a normal business there is give and take. At the moment, “good deal” is getting the house. Your customer is out of control and is likely to get caught up in a bidding war. The seller is holding a ridiculous number of cards. Your buyer needs to be flexible to understand this.
By helping your customers understand the current market and the details of the situation, they will have more control in directing the buying process and winning the property. Then they can say that “it should be”.
Jeff Lichtenstein is the President / Agent for Echo Fine Properties. Connect with him on Facebook or LinkedIn.