The Inventory Inquiry is a week-long Inman series analyzing the ongoing housing shortage. We’re digging into the state of the construction industry, the listing void that startups are vying to fill and the own-to-rent boom causing inventory schisms nationwide, among other big issues. Check back for more on the inventory imbroglio, all week long.
Real estate agents and their clients have struggled to deal with inventory issues for what feels like forever at this point.
The pandemic unleashed a slew of issues that’s brought the market to this moment — families suddenly needing larger homes, sellers unwilling to be caught in limbo without a new place to live during a public health crisis, and supply chain backlogs that have stunted the construction of new homes.
Agents and brokers continue to search for innovative ways to find or create inventory in their market to deal with the crisis that experts say could potentially plague buyers until 2025. Here, Inman has created a comprehensive resource for ways to find inventory when it seems like there’s nothing left on the shelves.
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Some agents might have a tendency to overlook these traditional methods for finding or creating new inventory, which sometimes can be seen as outdated, but they shouldn’t be dismissed.
Look to your CRM
Review your CRM for long-term leads, other qualified leads you’ve been in touch with before, and past clients to reconnect and see if they’ve considered selling their home recently, Inman contributor Tom Toole advises. Both the market and individuals’ life circumstances can change quickly, and sometimes all it takes is the right real estate agent asking the question at the right time.
Go through your phone contacts
With this strategy, Toole recommends starting at the bottom of the alphabet and working backward, since people have a tendency to neglect individuals at the bottom of the list. Send a simple text that’s not real estate-related to see how they’re doing and what’s new in their lives — and wait to see if they bring up the market.
Work your referral network
Time and again, some of the most successful real estate agents have told Inman that their business is purely referral-based. The 2020 National Association of Realtors (NAR) Profile of Home Buyers and Sellers also showed that 67 percent of sellers either rehired their previous agent or obtained a referral from a friend, neighbor or relative. Referrals work, so continue to invest heavily in them.
When you’re already working with a client in a particular neighborhood, take the opportunity to inform other residents through postcards or other methods about current housing statistics in the area. Remember to keep things personalized by using individuals’ names on any communication, Toole advises, so that residents don’t feel like they’re just another random person being blasted by a Realtor’s marketing.
Similar to circle dialing, choosing a neighborhood where residents might recognize your name to send out calls, direct mail and emails can be an effective way to generate new listings, Inman contributor Jimmy Burgess says. Remember, making these communications more personalized and specific will yield greater chances of success.
Each agent will have different opinions about this method, but at this point in the pandemic, it’s probably safe to go ahead and door-knock for seller leads, especially if you’re masked up. It’s definitely an old-school method, but can still produce results.
Open houses are known for drawing curious neighbors in, which is one good reason that they can be beneficial to agents today who need more inventory. Chatting neighbors up about the current market conditions that are ripe for sellers is just one more way to generate new listings. Be sure to take the proper safety precautions when hosting an open house, as well.
Contacting expired listings is a no-brainer. These sellers or rental owners have already decided to sell (or at least rent) once, and as the real estate professional, it makes perfect sense to offer your services should they need a hand. Property owners who had trouble renting may very well be attracted by the prospects of selling if you provide them with the right market data to entice them. Speak with the agents that represented these listings and offer a fair referral fee to take them off their hands — and don’t forget to ask them about the seller’s motivations.
FSBOs and abandoned properties
Sellers who decide to go it alone might not realize how good they could have it with an agent representing them until the right one comes along and provides a compelling case. Be prepared with your data and other resources to create a persuasive argument for why you could get them a better deal than they’d get by going without agent representation.
Likewise, identifying seemingly abandoned properties and tracking down their owners (check county records or order an owner and encumbrances for a specific property from your title company) to educate them on what they’re missing out on by selling can be another helpful tactic. FSBO listings can be found on sites like fizber.com, houzeo.com, Zillow.com, iGoFSBO.com and Craigslist.com.
Be on the lookout for life changes
This should be ingrained in the brain of most agents, but anytime someone goes through one of those milestone life changes like marriage, divorce, getting a new job, having children or experiencing a death in the family, it usually means a move isn’t far off in their future.
As an agent, be ready to approach your contacts when they go through these changes to let them know you can help support them on a personal level as well as help sell their home. Scan newspaper announcements and social media for these life updates and be ready to approach your contacts with a simple ‘How are you doing?’ following them.
In particular, Baby Boomers are in a period of transition right now — some may be ready to move closer to adult children as they get older or downsize into a one-story home. Now’s the time to keep in touch with your contacts in this generation and be ready to help them through the transition.
Burgess notes that “orphaned neighborhoods,” or neighborhoods of homes that are roughly three- to five-years-old and track-built by national builders are a great target area for agents. These builders typically work with dedicated sales agents who move on to the next community with them, so in a few years when those homeowners are considering moving up, they’re going to need an agent to help them sell. Chances are if one resident chooses to sell with you, others might have their interest piqued as well.
Schedule face-to-face time
Real estate coach and Inman contributor Bernice Ross reminds Inman readers that, according to NAR statistics from 2020, 77 percent of recent homesellers only interviewed one real estate agent before listing their property. That means that the first agent who gets some kind of face time with a seller is typically the one who wins the listing.
Therefore, agents should prioritize having face-to-face meetings once a month with the 150 contacts in their sphere most likely to refer their business or do business with them.
Agents simply cannot hesitate when it comes to trying new technology if it can help their clients in this challenging market. Here are a few tech-focused tools that can help with the dearth of inventory.
Become familiar with apps like DropOffer and Vulcan7
Tools like DropOffer and Vulcan7 allow agents to tap into off-market listings, Inman contributor Greg Burns advises. With DropOffer, agents can access a vast network of off-market properties and submit offers electronically to them, and also access property-specific data. Vulcan7 provides agents with expired, rental owner and FSBO leads, and offers CRM, dialer and video email tools for agents.
Consider alternative lending services
Alternative lending companies like Knock provide homeowners with solutions that can be extremely helpful in a tight inventory market, where homeowners can buy their new home before selling their old one and avoid double mortgage payments. Knock covers the old home’s mortgage before it sells, while also enabling buyers with all-cash buying power. This kind of security can ultimately give homeowners the confidence they need to put their homes on the market.
Buy seller leads
There’s no shame in buying seller leads online. Getting leads via services like BoldLeads or Facebook ads can be helpful for some agents, and just might become part of their regular marketing budget. Online leads typically don’t see sizable conversion rates, Burgess warns, but it can still be helpful to some agents — you never know where they might lead.
Send out unsolicited video CMAs
“Adding value to owners without them asking is always a good idea,” Burgess said. That’s why recording a video of yourself creating a comprehensive market analysis on your computer (via something like Zoom or BombBomb) and sending it to a homeowner is a great idea.
They get a little free information from a professional who’s tuned into the pulse of the market, which opens up opportunity for further discussion. Past buyers, visitors to an open house, or individuals in your farm market are all viable candidates for an unsolicited video CMA.
Lean into social media
TikTok, Instagram, Facebook, you name it — work your social media accounts to educate would-be sellers on the opportunities that await them this season. Once you make initial contact on social, follow up with more personalized touches, like a phone call or coffee date, Corcoran Group-affiliated brokers recommended at a recent Inman Connect Now event.
In this market, agents have to get creative and potentially do a little more legwork to find the right inventory for their buyers. Consider the following strategies to find those elusive listings.
Connect with homebuilders, investors, real estate attorneys and asset managers
Forging relationships with homebuilders can help you gain first-hand knowledge about when the projects they’re working on will become available to homeowners, Inman’s Libertina Brandt reported. Likewise, searching for old, rundown homes on the MLS that sold within the last year or two can be a good way to connect with investors (who typically buy these properties) and find out if they’re ready to flip that property or others they might have.
Real estate attorneys and bank asset managers are also helpful professionals to create relationships with, because they’re often some of the first people to know about homeowners under threat of foreclosure. Agents who can get in front of those individuals have an opportunity to both find new inventory and help homeowners avoid foreclosure by selling.
Make a hard pitch for leasebacks
One of the biggest mental barriers for sellers right now is the thought that they might not have a place ready to move into after they sell their homes. Educate them on leaseback options so that they feel comfortable listing their home.
An agent Inman spoke with about recent market conditions in Cleveland said that homes with sellers who needed to lease back the properties have not only sold, but have also received multiple offers because there’s so much demand. Depending on your own market conditions, encourage sellers not to worry that a leaseback might put off potential buyers.
‘In search of … ‘ posts on social media
Create wanted ads on social media for your buyers that say something like, “In search of a four-bedroom house with a large backyard,” circulate it among your network and encourage your buyers to share it, too, Burgess advises. Likewise, if you see posts like this on social media, don’t hesitate to share — it just takes the right potential seller to see it for them to create more inventory.
Find non-owner-occupied homes
This strategy has been a long-term one for Ross, who notes that title companies can typically pull lists of non-owner-occupied properties. If agents can get in with an investor who owns several of these properties, it could potentially yield up to 20 times as many transactions as a typical client, Ross says, depending on their flipping volume, which could also yield more inventory for an agent’s buyer clients.
Poorly marketed properties
Marketing certainly comes with the territory, but not every real estate agent is necessarily a savvy marketer. Therefore, it’s important for agents to be able to see beyond sloppy listing photos, feeble listing descriptions, and mislabeled properties to a house’s bones. Likewise, encourage buyers to see beyond cosmetic details and look for underlying potential, and reach out to listing agents for more details.
Search properties with estate and big garage sales
Someone who is looking to unload a lot of belongings via an estate or garage sale is also likely to be preparing for a life change, which may mean a move is in their future. Cross list these properties hosting sales with the MLS to see if any are currently listed, REH Real Estate recommends. Reach out to those that aren’t currently listed and offer a CMA or other market data to get the conversation started.
Pocket listings and The NLS
Any agent who delves into the world of pocket listings must ensure they’re up-to-date on NAR’s Clear Cooperation policy, which dictates that brokers cannot market properties publicly outside of their own staff or client sphere, and if they do, they must submit the listing to the MLS within one business day of marketing the property.
That said, brokers have found success building up a pocket listing network over their careers with potential sellers who are at various stages of being ready to sell. This takes a lot of time and effort, but may well be worth it in the long run.
Likewise, The National Listing Service (The NLS), which recently rebranded from the Property Listing Service and before that, the Pocket Listing Service (PLS), has similar opportunities for agents to get ahead of sellers. The now-public-facing site has reworked its design to be in line with the Clear Cooperation policy while providing new options to agents looking for inventory.
The NLS Private feature allows listing agents to share information about a property they hope to become the listing agent for by wooing buyer agents and their buyers, with the hope that if they present viable buyers to the would-be sellers, they might get the listing. The site feature NLS Wants also allows buyer agents to post quasi-wanted ads for their buyers and allow sellers who have either not chosen an agent yet or haven’t definitively decided to sell to be paired up with these agents who have a buyer match.