Editor’s note: This is the second of a five-part series.
The real estate industry has never lost its love for trying to predict the market. It also continues to place a heavy emphasis on print marketing with a "Me, Me, Me"-based approach. As the old saying goes, "The more things change, the more they stay the same."
Reading the tea leaves
Back in 2005, prices were exploding while the inventory supply was starting to build. This was the first sign that a downturn was on the way. An article I wrote at the time, "Weathering a Market Downturn," suggested seven strategies for surviving $4-a-gallon gasoline prices and a tough buyer’s market:
"For the last six months, an increasing number of signs point to a market downturn in many of the major markets. Recently, Alan Greenspan predicted a downturn in the real estate market that will result in a decline in prices and fewer sales. For example, what happens to your business and your profitability when gas is $4 or more per gallon?"
Today, we’re beginning to see the signs that the market is finally improving. California Association of Realtors Vice President Leslie Appleton-Young’s economic forecast for 2012 heralded two statistics that are normally harbingers of an improving market. In the "under $1 million" price range in California, there was an average of five months of inventory with some areas reporting only a 2.3 months’ supply. Where there is less than three months of inventory, you’re not only experiencing a seller’s market, you’re experiencing a very strong seller’s market.
The other positive harbinger that the market is improving was the level of multiple-offer activity. Depending upon the price range, the number of California properties that were selling with multiple offers was ranging between 35 percent and 58 percent. That’s not that much different from what was happening at the height of the last seller’s market.
What’s worth noting is that this trend is playing out in many markets across the country. Inventory is down, houses are selling in multiple offers, and some areas are starting to experience price appreciation.
It took almost two years before the inventory increases in 2005 started to drive prices down in 2007. The question is: Will it take until 2013 before the buying public and the news media wake up to the fact that this buyer’s market may already be shifting into a seller’s market?
Slow as snail mail
Back in 2004, the real estate industry was spending 96 percent of its marketing dollars on print advertising and only 4 percent on Web marketing. Some 58 percent of all agents failed to respond to email inquiries from their website. Of those that did respond, more than 70 percent took at least two days to respond.
Fast-forward to 2011: Agents continue to pour money into print marketing with the idea that someone will pick up the phone and call them. In the meantime, 50 percent of the Web leads continue to go unanswered. While consumers expect immediate response, the industry continues to fall way short of meeting this critical demand.
The evolution of the testimonial
In 2001, there were three primary ways to gather testimonials: You could persuade your referral database to tell someone else about your services; you could ask for a written testimonial; or you could ask your past clients if they would feel comfortable talking to potential future clients about your services.
In 2011, testimonials continue to be at the top of the list in terms of what works. A video testimonial on your Facebook business page, LinkedIn or Yelp not only has the potential for reaching thousands of people, it can also improve your search engine placement. Video testimonials also allow potential clients to get to know you before they inquire about doing business with you.
Agent rating systems are an interesting offshoot of the online testimonial trend. While the industry has been dragging its feet in this area, third-party vendors are jumping in to seize the opportunity. While most of what is posted online about agents tends to be positive, the power of word-of-mouth marketing is amplified a thousand-fold when someone posts anywhere online, especially on social media.
Reputation management is another area that has emerged as an offshoot from online testimonials. How can you monitor what is being said about you online? While Google Alerts provides some feedback, companies such as StepRep provide a much more robust monitoring of where you are being mentioned online. If you do encounter a problem, another company called ReputationDefender will help you clean up negative posts.
Ironically, one of the best ways to counteract a negative post is to use video testimonials. If you post a series of positive video testimonials over a several-week period, those posts will ultimately drive the negative posts to the second or third page of most online searches.
Are you interested in more timeless real estate tips from the last decade at Inman? If so, see Part 3 of this series on Monday.