Gain the Edge When It Comes to Finding Homes When Inventory Is Low
Several years months ago, before the pandemic, industry experts predicted a tight housing market for 2020. Throw in a coronavirus-sized wrench into the mix, and sure enough, the spring and summer seasons saw record-low home listings on the market.
The initial prediction was predicated on a few historically-backed assumptions:
- Low mortgage rates will lead to more buyers
- Rising rental prices will convert millennials into homebuyers
- Homeowners are staying in their homes longer than ever
- Less free-up of smaller homes due to acceptance of minimalism
- Families are smaller and kids are living with parents into their 20s
COVID-19 has further limited housing supply by limiting transactions through “shelter-in-place” and social distancing protocols, and initial uncertainty over how the virus is transmitted. As the months have passed and more information became available, these issues have slowly become less burdensome to the home buying and selling process. However, even with a drop in cases during the month of August, home inventory remains low throughout the nation.
U.S. Home Inventory Numbers
The National Association of REALTORS® recently reported that there were 18.2 percent fewer home listings than during the previous year. Meanwhile, mortgage rates are hovering just under three percent. When low inventory meets rising demand, it creates a unique mix of high-flying home prices. Right now, these basic assumptions are being proven true as we enter a 10-year low in home inventory.
4 Tips For Finding New Listings
A low inventory environment can present a fantastic opportunity for real estate agents who think creatively. Consider these tactics for uncovering those hidden gems and adding new homes to your featured listings.
1. Search MLS for Expired Listings
Many expired listings are a result of overpriced homes or inattentive agents (who do not complete their Continuing Education at The CE Shop). It’s unlikely that their desire to sell their home has diminished. Instead, they need an agent who is willing to go the extra distance and appropriately list a home at market value.
The best mode of action is to directly contact the owner and demonstrate the value you can bring to the table. Present a pre-listing marketing package and explain the benefits of selling their home in this uncertain market. If you can effectively express your knowledge, breadth, and drive to help them sell, they could reconsider placing their home back on the market with you as their agent.
2. Look Into Rental Listings
As rental price listings throughout the U.S. continue to rise, many families have seen an opportunity to forgo a sale and utilize the property to generate passive income. However, there are other rental listing scenarios where the family may have wanted to sell but were unable to due to timing, divorce settlements, or job changes.
These families are simply waiting out and trying to time the market when they don’t realize the entire market has changed. Inform rental homeowners on this matter and make sure to include the benefits of being able to pay off their current mortgage in exchange for a better rate on a new home. More often than not, this issue is the main reason why these families are forced to forgo a long-winded sell.
3. Target For Sale By Owners (FSBOs)
A listing is classified as a For Sale By Owner (FSBO) when an owner is selling real estate (usually their home) without the representation of a broker or agent. You’ve probably seen thousands of those red dinky signs where owners will sloppily write their cell number. Prospecting this group can be very lucrative but also tricky.
Like with expired MLS listings, make sure to present a pre-listing marketing package to demonstrate your value. This group wants to save as much money as possible by completing the home buying process on their own. They want to save and they believe they don’t need to waste money on your services. However, the financial gain and other benefits of working with a real estate agent clearly outweigh the heavy cost of trying to sell one’s home without one. Demonstrate these benefits and you could capture their listing.
4. Browse Social Media
Sites like Facebook Marketplace feature what are essentially FSBO listings made by owners trying to make their own home sale. Just go on there or search hashtags like #LookingToMove or #IWantToMove on Instagram and you’ll find a treasure trove of potential new home listings. Some of these listings may remind you of “We Buy Ugly Homes” advertisements. However, among the rubbish, you could find some uncut gems that may simply need a few quick upgrades or changes to marketing.
This is where you can help them. If you can find these types of homes that are only one or two steps away from being highly-demanded commodities, you can utilize your expertise to help get them sold. But again, demonstrating this value to these buyers is critical for your success.