Real estate markets in the United States have been very strong in the last few decades. Experts forecast market fluctuations and these expected trends change daily. However, most markets are favorable for sellers and the situation is very challenging for buyers, particularly those who want to buy residential properties.
Home prices increase steadily and inventory is always not enough to meet demands. So, buyers are willing to pay higher than the asking price to buy a home. Buyer’s agents have to work hard to get a reasonable deal for him. Competition is very strong in the market and agents have to struggle to buy a desired home for their clients. If you are an agent, this article will help you to navigate a hot market.
Understand market trends
Every real estate agent must know the latest market trends, it’s part of his Job. Read housing data daily, it will help you to know the trends and you can stay ahead of your competitors. It’s very important to notice when the market is hot to get the best deals. When prices rise, you can easily notice. In a hot market, homes sell quickly, and instead of other financing options, buyers offer full payment in cash. All these are considered Indicators of a hot market. When supply is more than demand, the market trends hot. A matrix can help you to calculate the day’s supply of inventory or DSI. To calculate this, you have to divide the number of homes available on market by the number of homes sold every month. For instance, if there were 1,000 homes in a market and 100 sold every month, the inventory is for 100 days. If there is a balance between power and supply in a specific market, it means the market can sustain itself for 6 months. If the market has more than 6 months of inventory, you are in a buyer’s market and if the inventory is for less than 6 months, it will be a seller’s market.
Understand the requirements of your client
To excel in the market, real estate agents have to understand the requirements of clients. We can divide real estate clients into two broad categories. One is investing buyers while others are looking for their primary property or their first home. The first type of buyer, the investors, was to invest in lucrative properties. But home buyers want to have personal property. So, as a property agent, you need to understand the goal of your client. Once you understand the needs of the customer, you can navigate better in the market.
Goals of a common investor
Different investors have different goals, but most investors buy a property and want to sell it again to get some profit. Some buyers want to use this property as a rental unit and want a steady passive income. Some buyers want to rent it out until they get a good profit. Investors develop their portfolios as they are in the real estate business, but it is their side perk. Every investor aims to have a steady cash flow and build equity. A property agent can help them by finding the best properties for them, in their preferred area. So, find a market where inventory is large, and to find such an area you will need housing information about the area. Certain tools are also available, which provide you with data quickly.
Goals of primary home buyers
Investors don’t want to live in the residential unit they are buying. They have to flip it or use it as a rental, so they show flexibility for the location. On the other hand, customers who want to buy a primary home are more concerned about location. They have area preferences and they also want amenities in close vicinity. Here comes the role of a property agent. If the preferred location of the client is very expensive, you have to find a similar neighborhood, which offers affordable housing. Keep an eye on off-market properties as well, they will help to satisfy your clients.
Meet the expectations of your clients
When the market is hot, you need to have realistic expectations. Primary home buyers are usually very excited about their homes. However, you have to keep them aware of ground realities and set realistic deadlines for them. Try to match their expectations but make sure they are realistic.
Trust your team
In a hot market, you cannot work alone, you need a team to work. Find an experienced agent and be part of his team. A good mentor can expose you to a real estate business and you can learn different strategies. You can learn how to show houses to clients, how to write different contracts etc. Houses are sold quickly in hot markets, so you need to have an administrative assistant. Similarly, a transaction coordinator is also important, who is responsible for all the paperwork.
Experienced agents must have a network of colleagues to meet the challenging needs of the market. Networking is very important to know what type of house is available in any specific area. If you remain isolated, you will be out of the market, soon. So, the key is to help other agents and they will be ready to help you when you need them.
Have the latest financing information
Finances are very important in the real estate business. Managing finances is not a real agent’s job. But if you have information about different financing options, current interest rates, and other similar things it will have a good impression on clients. Customers usually ask questions about mortgage, home prices, and credits and you need to guide them if they are getting themselves in any financial trouble. The credit of your client should be good when he buys the property. A high credit score ensures approval of a loan without any trouble.
Win Bidding wars without offering more money
A hot real estate market is not complete without a bidding war. You can always offer more money and win the war. But there are other ways too. You can attract sellers with non-financial factors, which are also very important. For instance, you can offer the seller to stay in the house for a certain period, until he finds a new house.