Based on the numbers and our personal experience of a larger number of prospects shopping but not buying, we suspect the seller’s market is about over. Here are five areas listing agents need to rethink and focus on when buyers are calling the shots.
Nicole Solari is a top-producing broker-owner in Northern California whose regular bimonthly column, which covers real estate marketing, selling strategies and working with clients, publishes on Tuesdays.
First quarter real estate sales data was straight up ugly for most California markets. Napa County was no exception. Days on market (DOM) — which stood at 79 days in December — rose to 117 days in January 2019.
Napa’s quarterly DOM stats remained fairly gruesome until returning to December levels in April and tightening further (to 58 days) in May.
As you might guess from DOM data, even though the number of properties on the market increased markedly, the sales rate through the first quarter declined sharply before recovering a bit in mid-to-late April, a trend that continued into May and June.
Fortunately, with its more abundant supply and lower entry-level prices, Solano County markets held a bit steadier than Napa’s. But neither is moving at what you’d call a breakneck pace. And prices have softened as a result. That mirrors nationwide trends.
The Pending Home Sales Index (an indicator of housing activity that measures contract activity based on signed real estate contracts for existing single-family homes, condos and co-ops) ticked up from April to May by 1.1 percent but remains 0.7 percent below 2018 levels, marking the 17th straight month of year-over-year decreases, according to the latest data from the National Association of Realtors (NAR).
The 20-city index produced by S&P CoreLogic showed prices rising at a seasonally adjusted rate of 0.1 percent in March versus February, and increasing only 2.7 percent compared to March, 2018 — the lowest increase in more than six years.
We hope a long winter and very wet spring are to blame for the market’s anemic performance to date. But, based on all the stats and our personal experience of larger numbers of prospects “shopping but not buying,” we suspect the seller’s market of the past few years is over.
Buyers are now calling the shots.
That means listing agents need to refine their sales plans in these key areas:
1. Stop pricing low
“Price it low, and generate lots of overbids” is no longer the smart play. The best strategy now is provide your sellers the most relevant sales comps and urge them to price their homes at the mid-point or slightly lower unless their homes are dead solid perfect.
Make sure they understand that only properties which are pristine, one-of-a-kind homes go into contract right away. Everything else moves more slowly, and overpriced properties won’t move at all.
2. Focus on condition
Even one-of-a-kind properties are expected to be in top cosmetic and operating condition or to be priced at a huge discount. (And, yes, kitchens and bathrooms do still sell houses!) This was buyers’ expectation even during the sellers’ market (you can blame HGTV for that!).
As buyers shop longer before deciding to pull the trigger, that attitude can only become more pronounced.
So before putting a property on the market, agents must review cosmetics, determine what else could negatively impact the property’s appeal to buyers and guide their sellers’ response.
- Is decor dated?
- Is the water heater double-strapped?
- Is the roof or HVAC system on its last legs?
- Are required smoke/CO2 detectors installed correctly?
- Is radon a problem, and, if so, has it been mitigated?
- Are financing issues a problem?
Prevention is a thousand times better than waiting until your seller is in contract and inspections come in riddled with problems or the lender pulls out over community issues.
That’s the reason we urge sellers to have inspections done before make-ready work on the house begins and to check with any local governments and homeowner associations to uncover problematic issues.
3. Make sure your sellers are flexible and responsive
A key tenet of effective marketing is to make it easy for your buyers to do what you want them to do. Get SUPRA and contractor lockboxes installed.
Make sure the lead time before showings is fairly short (say, two hours). Schedule open houses when the greatest number of your buyers will find it convenient to visit.
Help prepare your sellers to live clean, whip their homes into showroom condition — and vacate quickly.
4. Stage it!
Staging is no longer optional. With buyers taking shows like HGTV’s House Hunters as reality, sellers’ homes better look like the ones buyers see on those shows.
And their agents need to have a clear picture of who their buyers will be and communicate that to the stager. Good stagers are excellent merchandisers. They do their best work when they know who the target buyer is.
5. Target the right buyers with your marketing
Given how much time and money listing agents invest in new listing, failure is expensive! So, present each listing in terms of the lifestyle your target buyer seeks. Give your copy and photos emotional hooks.
Make your listing easy to find online and off. Sell the neighborhood and/or nearby amenities and events. Target social media (and boost posts) to your desired demographic.
Get video tours professionally shot. Carefully craft outreach to agents who represent your target buyers. Reach out to your target buyers directly by appealing to their known interests.
In a place like Napa, that translates to meeting them at special events like the music festival Bottle Rock, golf tournaments, the Wine Auction and similar venues. Family-friendly Solano County tends to be more oriented toward schools and youth activities, so our marketing there reflects those preferences.
Know this: You can manage the first five items on this list perfectly; and, if your marketing isn’t superbly tailored and executed, you might not succeed. So, make marketing a priority.
It’s a buyer’s market. Agents can’t just keep doing what we’ve always done. We have to step up our game.
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Nicole Solari is owner and managing broker of The Solari Group in Solano and Napa Counties in Northern California. Nicole runs one of the highest producing brokerages in all of Northern California.