The big dot-com bubble burst.
The September 11th terrorist attacks.
The mid-2000s housing bubble.
Selling real estate in a market shift makes many agents nervous.
While terrorist attacks, recessions, and pandemics all affect real estate differently, it pays to be prepared for the next shift. This is true when we shift from a buyer’s to a seller’s market and vice versa.
Now that COVID-19 is here, real estate agents — like the rest of the world — will need to shift gears.
COVID-19 proves that we never know when a housing bubble may pop or the next recession will occur.
And we certainly can’t predict the next pandemic.
But what we can do is prepare to navigate through the next shift. We talked to three seasoned agents, who shared helpful tips to selling real estate in a market shift.
Let’s navigate market shifts of the past
Jason Huerkamp is a successful Minneapolis real estate agent who sells homes 84% faster than the average Minneapolis agent.
Over the years, Huerkamp witnessed several market shifts, from a seller’s to a buyer’s market and back again. “Really, 2007 is when you knew something was changing, and 2008 is when you really could add confirmation that something was going terribly wrong,” says Huerkamp.
He notes that the mid-2000s housing bubble was entirely different than any other shift. “The real estate industry was built on a house of cards, there was a lot of fraud going on, and title and mortgage lending was all over the place.”
When experts predict a recession, they typically demonstrate signs and patterns that correlate with a potential market shift.
Some signs might include when stocks plummet, a swift increase in unemployment rates, and a significant decline in economic activity. An example is the 9/11 terrorist attacks, with 143,000 jobs lost in New York City within a three-month period that lead to a micro recession.
Even with financial expert insight, Heurkamp recalls his own signs of market shifts in the past. “You could start seeing there were a lot of foreclosures,” says Huerkamp.
There was also a significant discrepancy in home values. “You started going to listing appointments, and you knew what the people bought it for, and you knew what it was worth even if they didn’t refinance and pull a bunch of money out.”
During the mid-2000s housing bubble, an oversupply of unsold homes sat on the market, including foreclosures.
This oversupply was largely in part of lax lenders standards, such as zero-down-payment loans and negative amortization loans.
Another red flag indicating a current market shift is a large decrease in national home prices. This reflects Huerkamp’s early observation of inconsistent home value and sale price.
Huerkamp believes that COVID-19 won’t necessarily result in major changes for median home prices. “The average price will probably fall, but the median number probably isn’t going to move down very much,” says Heurkamp. “I think that the higher-end real estate market in any particular city or area or locale, that has a chance of probably being affected the most.”
One thing that remains certain is that the US has a long history of market shifts, both positive and negative. Along with Huerkamp, two other real estate agents bring their advice on how to handle these shifts to come out stronger on the other side.
6 tips to handle a market shift
Troy Walseth and Wendy Lockhart are on the Keller Williams Realty team for Seminole, Florida and the Gulf Beaches. Walseth started his real estate career in 1993 and navigated all of the major and minor market shifts since that period. Lockhart received her license at the end of 2007 and began her career during the last major market shift.
Walseth, Lockhart, and Heurkamp all agree that COVID-19 is unlike any other market shift of their lifetime. “The saving grace about this shift is that it’s totally different,” says Heurkamp.
“It’s based on a pandemic, and it’s a totally different thing. People have to realize that, and it’s hard to wrap your hands around that.”
No matter the cause of the market shift, these agents offer six smart suggestions to make it through.
1. Watch your bottom line
Many people will experience a change in income or cash flow due to COVID-19, even it’s a trickle-down effect later down the line.
“We’re looking at our bottom line every few days to a week,” says Walseth. “Just so we can see where we can make a cut in the business and what’s not important right now. We’re doing it personally and professionally.”
2. Look at the return on investment
If you have trouble deciding what expenses (if any) to cut, think about how those investments serve you.
“We’re putting properties under contract, so you don’t want to chop anything that’s working right now,” says Walseth.
Lockhart advises agents to step back and look at the big picture for ROI. “Agents should be looking at: how long can I sustain my business, how much cash do I have on hand, and does this return make sense?” Think of how your finances will look in three or four months if things don’t change.
3. Combine to cut costs
For example, Walseth and Lockhart have three different CRMs. They want to use those more efficiently and combine them to cut costs.
4. Stay informed
Rely on your local board, the National Association of Realtors, and your local health department to learn of new guidelines or changes in the industry.
5. Don’t axe your marketing efforts, listing or otherwise
“You can’t cut back on the customer service to the client. You still need to have professional photos, and if the property needs to be staged, you still have to stage it,” says Lockhart.
Walseth agrees with Lockhart that marketing is still a priority. “I believe you still need to be doing marketing, but maybe with a different message,” says Walseth. “You’ve got to keep up with your lead generation.”
6. Think about how you communicate and generate leads
Lead generation won’t look the same during or even after COVID-19 as it did at the start of 2020.
All three agents agree that it’s important to check in with clients and ask how they’re doing. They might have questions or concerns that you can help alleviate. It’s also wise to check in with past clients and referrals.
COVID-19 presents its own unique set of challenges to everyone, including agents. One of those challenges is social distancing, and our three agents share how you can overcome these obstacles.
Unique workarounds for the COVID-19 market shift
The order to keep a distance of six feet apart might feel like a challenge in real estate, especially when you interact with clients. “Sellers care who comes into their house, and buyers care about the seller’s house,” says Lockhart. Both parties are concerned about sanitation and social distancing, and technology can help bridge the gap until it’s safe to resume normal behavior.
“We can still do showings but it’s slightly different. We’re putting more videos online,” says Huerkamp. “We’re also using a product called Matterport.”
Matterport is a 3-D software product that creates a model of any property and allows you to view it from the inside or outside, as well as rotate it to any angle.
“The biggest thing we’ve been monitoring is, can video help us reduce the number of showings on a property?” says Huerkamp. “It definitely can, but so can the internet in general. Thirty years ago there was no such thing as looking up a listing online.”
Agents with clients who use Apple products can consider FaceTime for showings. They can also interact with clients via video over Facebook Messenger. Other popular methods include Zoom or Skype to replace a face-to-face meeting.
“The silver lining is that technology can help soften the blow of COVID,” says Huerkamp.
Even though technology might help agents survive and sell real estate through a market shift, it can’t replace relationships. It’s vital to keep in touch with clients as we progress through COVID-19.
In addition technology, frequent check-ins with clients are critical during COVID-19. “Make it nothing about real estate. Reach out to those past clients, whether it’s by a phone call, text, a social media quiet post, and just say, ‘Hey, we’re here,’” says Huerkamp. “If there’s anything that we can do to support you, we’re happy to do so and call and check in on people. That’s the biggest thing to do with your sphere.”
No matter how long COVID-19 or the next market shift may last, we are all in this together. Every market shift is an experience to learn and grow, which helps us to weather future storms that challenge us.
Header Image Source: (Michael Glass / Unsplash)