Middleton Elite Coaching recently concluded a multi-city US tour of our live event, ‘Dominating In The Future Real Estate Market’. During our time in 5 different markets, we had the opportunity to speak with hundreds of agents, teams, and brokerages. We discovered that all have one common goal; to out-think and out-hustle the competition while dominating their market.
The world has changed. The market has changed. The only constant is change. It is within that change and uncertainty that we find opportunities. We’re always looking forward. The past 2+ years have been a whirlwind. For the most part, the market has made it easy. Many agents have had the best financial years of their lives. While the wind may not longer be at our back, we firmly believe that next year can be better than this year if that’s what you desire – incremental improvements over time. You create your future.
5 Proven Strategies For Excelling With Buyers
1. Let’s not attempt to time the market. Instead, let’s take advantage of the market we’re in.
This is a great script that we recommend incorporating into your buyer consultation.
Before digging in on this script, a great exercise you can do by yourself or with your team is to make a list of all of the reasons that now is a great time to be a buyer. Once you have this list, create an infographic (or have one created for you) that you can present at your buyer consultation.
Now, lead with this script.
“Let’s not attempt to time the market. Instead, let’s take advantage of the market we’re in. Here are all of the reasons that now is a great time to be a buyer.”
Proceed to present your infographic and talking points for the reasons you’ve listed.
2. … and we might even be able to find you a deal.
Can you find a deal in this market right now? Yes.
Was it very difficult to find a deal a year ago? Also yes.
Buyers in today’s market are either looking for a great house at a fair price or a good house at a deal.
While we believe it is unlikely that the entire market is going on a hot sale, we are seeing opportunities to find a great cherry-picked deal in today’s market.
We also recommend surveying your database for known and potential investors to add to your buyer pipeline. This might go something like this:
“How many of you might like to buy an investment property sometime in the next 2 years? If so, let’s talk about what you’re looking for.”
Work with them to build out their investment criteria and then ask:
“What if I could find that property for you in the next 6 months? 3 months? 2 weeks?”
You’ve just assessed buyer motivation for this new addition to your buyer pipeline.
3. Using rate buydowns and alternative financing options.
There may be opportunities for your buyers to save money using seller-paid buydowns instead of price reductions. Many agents in the industry today have not seen a time when creative finance options were necessary.
A “rate buydown” gives borrowers lower interest rates in exchange for higher fees or “discount points” paid at closing.
Make sure that you, the agents on your team, and your buyers are familiar with the alternative financing options available to them. This will go a long way in determining what they can afford and the motivation they have to do so.
MEC Coach Debbie Lariviere discusses some of these creative financing options with a mortgage professional in this video.
4. Appraisals, repairs, and contingencies are back into contracts.
Just as with point number 3, there are some agents who have not sold real estate during a time when contingencies were part of a contract. There are also buyers who are not familiar with contract contingencies such as inspections, repair requests, and appraisals.
Taking the time to become familiar with the various contingencies that a buyer may be able to work into their contract will give them a little more leverage in negotiating a great deal. It will also give them more certainty that they are making a smart investment.
5. Evaluate the quality of your buyer pipeline.
Inspect the strength of your buyer pipeline. Evaluate the quality of your buyer pipeline.
A year ago, if you had 12 active buyers in your pipeline, chances are those were legit buyers who were going to convert into closings. If you looked at your pipeline today, 2 out of 3 of your 12 active buyers might be motivated to act now and about 8 or 9 are on a “wait and see” motivation level.
Get really clear on your pipeline and, if you are a team leader, the pipelines of your team members. Who on your list HAS to, not WANTS to, buy a home in the next 90 days? This is a leading indicator for you of your pending future transactions. You cannot make sound financial decisions and predictions about your business based on a hopeful pipeline.
5 Proven Strategies For Excelling With Sellers
1. You’re not losing money. You’re making $_______ on the sale of your home compared to when you bought it in ________ (year).
It’s fair to say that in most markets median home prices are still going up.
There are some that will argue that, because of price reductions, median home sale prices are going down.
Generally, price reductions are happening because of overpriced listings. Price reductions don’t mean that prices (values) are going down. They mostly mean that overpriced listings are being reduced to meet the market demands.
We recommend having an equity growth conversation with your past clients.
Do you think that most of your past clients know how much their home has appreciated since they bought it from you? Probably not.
Most people do not know how much equity growth they have experienced over the last 2,5,10 years. This creates a great opportunity for you to go back to your past clients (every one of them) and, using the script below, show them what they paid for their home vs. what it’s worth today.
“Hi, (client name)!
Did you know that since buying your home in _______ (year) for ________(price), it has gained _______(equity) in value? This means that if you were to sell your home today, you could make ______ (estimated net proceeds).”
You might uncover some sellers using this script. We encourage you to proactively lead the equity growth conversation to uncover some listing opportunities for yourself. They might also be interested in taking some of their equity and investing in a second home, creating a buyer opportunity for you.
2. Right now you can sell in a seller’s market AND buy in a buyer’s market at the same time.
Statistically, in most parts of the country, we’re still in a seller’s market AND can still negotiate on the buy side. Home prices are still going up, average days on market are still low, and inventory is still low compared to historical norms. Simultaneously, you can STILL negotiate as a buyer. You can play both sides effectively if you play them well.
If rates come up as part of this conversation, we have a script for this:
“I have no idea what direction rates are going to go. If you bought today and rates went up tomorrow, you’d look really smart, because you are. And, on the flip side, if you bought today and rates went down tomorrow, you’d refinance and look very smart, because you are. Either way, you’re still smart. And either way, you’re still right.”
Emotional markets create opportunities for rational people.
There is a lot of emotion in the real estate market right now. There is a certain percentage of people in your database who are really going to lean in on the opportunity to sell at top dollar and cherry-pick on the buy side.
3. Present your communication guarantee and consistently update on changing market trends.
There was a time, way back when, that you actually had to provide your seller with updates because their home had not yet sold. We’ve entered back into this layer of communication with sellers in the present market.
Refining your communication guarantee is a proven way to establish seller expectations at your listing consultation.
We have a couple of rules of thumb on this:
- No news is news
- An outbound conversation to your seller is almost always easier than an inbound phone call from your seller
If you call a seller with an update, even if no news is news, it will almost always be a shorter conversation than the seller calling you to say “hey, what have you done for me lately?”. To further our point on this, a phone call from your seller rarely comes at an opportune time.
Refine what your communication rhythm is going to be with your sellers and include this commitment in your listing consultation.
This is a great framework for your seller communication –
- Here’s what happened over the weekend (showing feedback)
- Here’s what’s going on in the market area (comps/new listings/changing market trends)
- Here’s what I’m going to do this week to get your home sold.
At your listing consultation, establish the frequency by which your seller would like you to communicate this information with them. Then guarantee that you will do so.
4. Regularly review your seller’s motivation on a scale of 1-10.
Establish your seller’s motivation at the listing consultation and again during the time listed.
You can do this with an easy 1-10 scale:
“On a scale of 1-10, where 1 is you don’t care if it ever sold and 10 is you are super motivated to sell, how motivated are you to sell your home?”
You might hear:
”We really don’t have to sell.” or they’ll say “7”, suggesting they are motivated though not desperate.
Follow their answer up with “Great, what does _(number)__ mean to you?”
For example- If a seller says they are a 7 on the 1-10 scale and you say “Great, what does 7 mean to you?”, and they say “well, we really want to be in Florida by Christmas because our grandkids will be visiting for the holidays.” and it is currently the middle of November, this 7 is actually more like an 11.
On the other hand, they might say they are a 7 and you ask “Great, what does 7 mean to you?” and they say “We’ve really been wanting to get back up to New York and we suppose if we can get there in the next 3 years that would be okay with us.” – this 7 is more like a 2.
It doesn’t matter what the number is, it matters how they calibrate the number. If they are really really motivated and the market doesn’t support their list price, they might be more inclined to have a price reduction conversation than someone who isn’t motivated to sell at all. The only way for you to know this is to frequently evaluate their motivation scale.
It is difficult to hold onto unmotivated overpriced sellers for the long term. Calibrating their motivation is important for success with your seller.
5. Lead with value, then focus on strategic price reductions.
Let’s assume that (and we hope this happens for you) you have a motivated seller who is ready to listen to your recommendations. Your target zone is to be in the bottom third of price and the top third of condition relative to the active comps in the market.
This means that if there are 8 other listings in this neighborhood and yours will be the 9th, you’ll want to be in the bottom 3 in price, and the top third in condition. You’re going to maximize the opportunity for your seller by doing so. The buyer pool of the current market is too small to be at the top of price or bottom of condition.
Price reductions, when done well, are a two-step process.
There are two reasons for a price reduction –
- To introduce the property to a new group of buyers
- To reposition it relative to the active comps
See Bill explain this in this video here. You can also view his discussion on appropriately timing price reductions here.
In the current market, buyers are looking at what they missed in rate opportunities, and sellers are looking at what they missed in buyer demand. We have to work with our sellers to stop looking in the rearview mirror and start looking out of the windshield.
Set the stage for the time horizon that you might need a price reduction while working with your seller to price in the bottom third in price now. This is leading with value.
There are three things we hope these strategies will do for you:
1. Reflect – we hope you’ll reflect back to the basics on your buyer and seller practices and improve them to better serve you in the current market.
2. Plan For Action – be reminded of the fundamentals and implement these new strategies for immediate action.
3. Allow Us To Help You – we want to help you achieve higher levels of success. If you would like to become incrementally better at working with buyers and sellers, give us a call. We welcome the opportunity to customize your action plan for excelling with buyers and sellers.
Bill, Debbie, & The MEC Team