MARKET BASICS

By
Real Estate Agent with Your Friend in Real Estate, LLC

Every market is unique, but we know that the real estate market is even more unique. Consideration of that uniqueness will help us to accept or reject ideas that periodically come to us from other markets, or from those who do not understand how our market fctions. (google 8 New Rules of Real Estate) It can also serve to make us more aware of opportunities that exist in our own back yard, and lead us to be more effective for ourselves and for our clients: This means producing better results while expending less time and money. What other market enjoys a combination of motivators that include both investment potential and fulfillment of a basic need such as shelter? What other market enjoys the tax benefits? What other purchase is so important and can give rise to such emotion? What other market is subject to such scrutiny and control? What other market involves such a multi-faceted buying service (that’s us) aimed at the purchase of a high-value, non-standardized product. How many other sales and marketing people need such a diverse combination of skills to survive?

It will be helpful to define the parameters of a major real estate market. Examine whether your local market shares these general characteristics of the major markets in the United States:
¨ It is oriented around a major population center.
¨ It has a well defined set of laws, guidelines, customs, and expectations.
¨ It is populated mainly by educated, thoughtful buyers and sellers who rarely act impulsively. (OK - LOL)
¨ It enjoys an effective means of information exchange; a computerized MLS database.
¨ It utilizes a lockbox or keysafe system that facilitates showing properties that are for sale.
The parameters above are intrinsic to a major real estate market. It will help to keep the definition in mind as we enter an unprecedented era of rapid change in real estate. Within this framework, you will attempt to do your daily business, learn, and adapt. You will effectively utilize the tools at your disposal to resolve strategic problems and capitalize on the opportunities presented, but always in conformance with the indigenous constraints.

How do homes get sold in your market? This is a very important question to which you should give serious thought. Too often we are content to listen to others who might not have the true answer. We accept too readily: If it sounds right, it must be right; if it works, use it. Worse yet, we sometimes start to believe what we tell our prospective clients during the listing presentation: "List with me, I’ll find your buyer with my dynamite marketing program." We believe our own twaddle without the slightest question.

Did you ever stop to think? What really sells homes? In many major markets, the answer is not open houses, signs, newspaper ads, networking, TV exposure, hot lines, glossy magazines ads, talking homes, the Internet, your dynamite marketing plan, or any of the clever little "listing tools," some of which disappear as fast as they come. (let’s hear a round of applause for the “talking house”) Even if you never tell a soul, you have a responsibility as a "professional" to answer the question: How does a typical buyer find a home? The answer lies in the flow of information from sellers to buyers. In major markets the answer is: The MLS system. In many major markets, this is very simply, the efficient information interchange afforded by a computerized, searchable MLS database. "But I can’t tell my sellers the MLS will find their buyer," you wail. "They’ll realize they really don’t need me. Worse yet, they’ll list with a cut-rate (or internet) broker and I’ll be out of business."

If you believe that learning the truth and telling the truth will put you out of business, it’s better that you find out sooner rather that later. Maybe you should go get a real job. No, wait, take heart, we have much more to offer. But in order to survive and to remain pertinent, it is incumbent upon us to take the lead: To know the facts and to utilize them to our clients’ benefit as well as our own. Just think of the implications, if the MLS is king, then entering the information into the system is more than just a boring and painful routine to be completed in the shortest time possible. It is the key to success, worthy of your most careful and thoughtful consideration.


What are the implications? In a typical major market with an efficient and well utilized MLS system, about 95% of home sales by real estate agents are the result of the MLS connection. Open houses with newspaper ads and "For Sale" signs account for most of the remaining 5% of sales. (ed. note: newspaper ads???) All other marketing efforts are ineffective. It is estimated that well over 100 open houses must be held to sell a specific home that way. A separate study in the Northeast found that over 400 newspaper ads must be run to sell a specific home. (and that was back when people read newspapers) Wow! Those are not good odds. Those are not efficient uses of resources. But go ahead, do open houses and run ads if your market requires it. But always level with your clients. Ineffective marketing techniques will not hurt the marketing effort even if they are a waste, but to leave your clients with the idea that they will work some magic and somehow sell a home is being much less than candid. Remember the first (old) rule of real estate: ALWAYS TELL THE TRUTH.

Take the time to seek out a reliable source and find out what drives your market. Demand to see the data. If you can not find the answer, you will have to develop the information yourself. In any event, the rewards will be great. Understanding these basic ideas, you are on the road to success.

This article is excerpted from David Rathgeber's AGENT'S GUIDE to REAL ESTATE which is free online at http://www.davidr.net/AgentsGuide.html 

Posted by

David Rathgeber 

Your Friend in Real Estate, LLC

Broker / Owner and NVAR Lifetime Top Producer

703 434 0773 / davidr@davidr.net / www.davidr.net

Serving the Washington DC metro area since 1987

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