Happy Sunday, Gang!
Over the years I have been selling residential real estate here in Chicago, I have found one routine that ultimately makes me more money than anything else. The routine -
CONSISTENT TELEPHONE FOLLOW-UP!
I provide quick news to my clients on market trends here on the North Side of Chicago, check in on the family, and remind them if they need our Team's help, or if they know anyone who does, to call me, or have those they know contact me. Rather soft sell - they know we're always there for them, and, predictably, they call me back when they need our help.
Each business day, I call between 12-15 Valued Clients (never say "Past" clients - because "Valued" Clients will always be with you!) Plus, any FSBO's or Expired Listings we might be able to help.
Within the last few weeks, however, since the beginning of the year, the tone of the responses I get has changed - rather negatively, and the aggregated comments cause me concern.
My clients say things like, "The Real Estate Market Really Sucks, huh?" Or, "I don't see how you folks are surviving in today's real estate business." Or, "have you thought about teaching or training - nobody is buying or selling real estate these days, right?"
Of course, we need to take these shoot-from-the-hip comments with a grain of salt - after all, we know what the media has been reporting since the sub-prime crisis began last year, and, even before that, when the Real Estate Market here in Chicago and across the U.S. transitioned from a Seller's Paradise to, perhaps, a Buyer's Playground.
But we know - perception often creates reality, and we Real Estate Practitioners will either fail, survive, or flourish based on how we respond to these perceptions.
In a nutshell, here is a Status Report on Today's Real Estate Market here in Chicago and the suburbs -
"You'll sell for less than you thought you would, and
You'll get more for your money when you buy (assuming you've got good financial credentials), and
Five years from now, you'll thank me profusely for my advice - assuming you FOLLOW it!"
Let's take a look at the situation today from two points of view - prospective sellers, and prospective buyers.
From the tone of recent conversations - some PROSPECTIVE SELLERS are throwing in the towel! Gone are the days when they say, "my buddy down the street got SO MUCH for their home." It is now replaced by, "We're going to hunker down and stay put until the market gets better (i.e. - the way it was a couple of years ago)."
Forget the fact their family is growing, and their current place is too small. Let's talk in the spring, or next year - the market is bound to get better - right? Fact is, if they would have taken that tone one year ago, in early 2007, here in Chicago, their sale price would have been between three and nine percent this year, in 2008, depending on the neighborhood in which they live - and the trend is likely to continue for a while, according to local and regional "experts."
Many sellers don't look at it from THIS ANGLE - when real estate supply and demand do approach balanced inventory levels, the houses they are looking to buy now - which can be had for considerably reduced prices - will INCREASE as well! Most don't see this - they think when THEIR CURRENT HOUSE increases in price, the new house they are considering to buy will magically stay price unchanged!
The equity build, for the new house and new neighborhood they are considering, could be rapid in a couple of years - and they will be missing out on that.
Therefore, they are not losing, net-net, nearly as much as they think! We have to get past human nature, however - for many, it is a big EGO BLOW to realize your current house is not worth nearly as much as you thought it would be.
Let's take a look at the perspective of PROSPECTIVE BUYERS. Here's where it gets a bit crazy!
Mortgage interest rates are low - down considerably from last year (see my recent AR post, as well as one on our Dean's Team Blog Center - BlogChicagoHomes.com). However, fewer people can qualify at these best advertised rates, because of far-more-stringent underwriting standards. The two-year-old mentality among some potential buyers of high-leverage, low-down loans cannot be in reach for many with slightly-imperfect credit credentials - so they are forced to pay higher rates when they borrow for their new place.
The not-too-old trick of tapping home equity in the form of a Home Equity Line of Credit (HELOC) to buy a new home won't work anymore around here in Chicago, and in many other places - equity has eroded, and a quick market time to sell your old place virtually non existent, without an aggressive price.
Couple with this the growing buyer belief that they can get ANY house at a deep discount, then BEAT THE SELLER'S DOWN during the inspection period with repair requests and credits, and any purchase negotiation that ends in something other than a "fire sale" price often leaves doubt and remorse in the mind of the buyer!
And - many buyers, reading the Wall Street Journal on occasion, feel the market has yet to hit bottom! Wait a little more, and prices will go down even further! DON'T BUY NOW - WAIT, WAIT, WAIT!
If they wait too long, however, there will be no guarantee that these perceived "bargains" will be around as real estate inventory starts to balance and prices start to again rise - perhaps quickly, and without notice, in the most desirable areas.
To be successful this year, folks, we can't ignore seller and buyer's perceptions! Those in our business who will be most successful will focus on seller's LIFESTYLE MOTIVATIONS for the move they are considering, stress the LONG-TERM BENEFITS of not putting their dreams and plans on hold - and reminding these skittish clients that the End of the World is still a long way off!
I would love to know what you think!
DEAN & DEAN'S TEAM CHICAGO
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