If you’re relying on national real estate data to help your buyers and sellers make decisions, you’re doing a disservice to yourself and to your clients. Buyers and sellers rely on their agents to help them understand local markets so they can make informed real estate decisions with actual relevant data.
Our team built a method to help us better understand the reality around us and effectively communicate the current state of the local market to our clients. It’s an easy Google spreadsheet that will give you a better picture of the real estate market so you can educate and provide value to your own clients.
We call it the Get Off The Fence calculator, and it helps us provide real, local data to our clients and establish ourselves as the knowledge brokers in our market.
1. Use data from your local market to educate your customers
Many clients operate from information they heard from a friend or from the news instead of relying on actual market data. And for our part, many agents talk through stories and assumptions without using actual data to support their claims, which means they’re not positioning themselves as the knowledge brokers. Instead, they are guessing and using generalities.
Show your clients actual data to move them off the fence and into a real estate decision.
- Choose a date in the marketplace as your starting place.
Because you’re going to start by comparing two separate points in the market, you’ll start by choosing one date from the several months in the past. For example, you might choose October 2021 as your starting place, but try to choose a point in the market at which there was significant activity.
Then choose a date for which you have the most recent set of data, like January 2022, and compare the following data:
- The number of units for sale in each county or municipality that you service
- The inventory level, or the number of months worth of inventory available
- Calculate the percentage change between the two data points. Use a simple math equation to determine the change in inventory over the time period:
- Write down the number of homes currently available (January 2022 in this example)
- Write down the number of homes available at the first data point (October 2021 in this example)
- Subtract the newest number (January) from the oldest number (October) to find the change in inventory
- Divide the change in inventory by the original inventory (October)
- Multiply your answer by 100 to find the percentage of change.
Realtors create challenges for themselves when they fail to learn about their local market. Because we know that real estate is hyper-local, we can’t rely on data we get from national news outlets because the situation in your market is likely different from the situation in mine.
When you show people the data that reflect the changes that are happening in the market, your clients get an actual picture of the current situation rather than an off-the-cuff report that someone else heard.
2. Research your local shadow inventory
When you hear the term “shadow inventory,” you likely think of foreclosure properties, which banks hold back from the market for a period of time before eventually selling them. These homes should be part of your market awareness, because they will eventually be sold by the banks that hold the liens.
Additionally, the Coronavirus pandemic created a new kind of shadow inventory in the form of active listings that were removed from the market during the stay-at-home orders. Find out the date that your state issued a stay-at-home order (if it did) and then look for homes in the MLS that show a status of “withdrawn” or “temporarily off the market” around that date.
If you find those shadow homes, you can initiate a conversation with those agents to find out what the seller intends to do with the home. Better yet, your awareness of the lesser-known aspects of the market will establish you as the knowledge broker for your clients and will differentiate you as an agent who goes the extra mile to help clients fully understand the market.
When you share actual data about the market with your clients who are on the fence about real estate, you can begin a meaningful conversation about whether to move forward and what that might look like.