by Michele Newbern-Gillis
and Miranda G. McLeod
Staff Writers
Incentives, neutral paint, clean up clutter, a new car? What do you do to sell when the market changes?
Many Realtors and builders are resorting to non-traditional methods to increase the possibility of selling homes while the real estate market continues its doldrum swing.
The market, as you very well know, has taken a downturn.
The latest Florida Association of Realtors’ statistics don’t paint a pretty picture: sales in the Jacksonville metropolitan statistical area declined 23 percent from last September. Fewer than half as many condos were sold. Even the median price went slightly down.
Generating new business can pose challenge when the market slows but that challenge could bring out the creativity inside Realtors, builders, loan officers and other industry professionals.
But Carolyn McMoran of National City Mortgage said the first rule in this sagging market is to remember the basics.
“Everyone says they have been in the business for so many years but, with the rate the industry changes, you can only bet on the rules for one year at a time,” said McMoran. “How we did business last year is not totally relevant to how we do business today.”
McMoran has been in the industry for more than 30 years and says she acts like she’s been in the industry one year 30 times over, due to changes and how the industry evolves.
“Know that each year is different and you have to adjust. We are going back to checking out our toolboxes for what is best for the customer, not just the latest and greatest product today,” she said. “Sometimes the vanilla loan is the best for the customer. Rates are still very good and we are adjusting to the reduction of investors. We all just need to work a little more and harder to make the American Dream come true for everyone.”
Many Realtors are adjusting to the market by being more selective with their listings. Premier Properties Realty Group’s Carol Tunis said that because of the amount of homes currently on the market, she’s approaching her listings a little differently — from the inside out.
“Homes must be priced accordingly, as gone are the days of putting a price on a property and it’s gone. (Homes) must also be in top-notch condition,” she said. “This means new paint, repairs and plants and flowers for curb appeal.”
And she says making homes smell good is important too. But more importantly, said Tunis, is a pre-home inspection and a clutter free home when doing walk throughs.
“With all the homes on the market, you want a buyer to be wowed when they walk in and decide at that moment that this is the house they can’t live without.”
Besides incentives like throwing in free or discounted upgrades such as high-end kitchens, paying higher commissions to real estate brokers and providing low-cost financing, builders are also working to bring customers back to the market.
Options for buyers include a range of loan products that can help clients but the house of their dreams, while keeping their wallets grounded.
From the builder’s standpoint, the National Association of Home Builders/Wells Fargo Housing Market Index suggests that builder attitudes for new homes sales may be stabilizing, according to NAHB Chief Economist David Seiders. This is attributable to several key economic factors: mortgage interest rates have fallen substantially from their summer highs, energy prices have dropped dramatically from their recent peaks, consumer sentiment has posted a strong rebound and the job market is doing reasonably well, he said.
“More than three out of four builders are offering substantial sales incentives to move their product and limit cancellations, and this aggressive strategy is working — making this an opportune time for home buyers to enter the market,” said NAHB President David Pressly. “The market correction appears to be approaching the bottom in terms of sales volume, and we expect the supply-demand balance to improve considerably before long.”
Both Donna Theiss and Wally Sears of SunTrust Home Mortgage say bridge loans are one way to go when clients want to purchase a new home, but have trouble selling their existing home.
“My team has been able to help out many real estate agents from losing the deal and putting the client in the home of their dreams (with bridge loans),” said Theiss.
She describes a bridge loan as a mortgage loan designed specifically to help clients purchase a new home without having to use the proceeds from the sale of their existing home. The clients makes no out-of-pocket mortgage payments for the first six months of the loan, which allows clients who are selling their home up to 12 months to repay the debt. Clients have the ability to borrow up to 90 percent of the value of their current home to use as a down payment on the new home they are purchasing. New mortgage loans can be recalculated or recast free of charge upon the sale of the current home if they use a portfolio loan product, she said. Clients pay interest-only portion of borrowed amount during the 12-month period.
“The bridge loan debt is not used in the debt ratio, so it makes qualifying easy,” said Sears.
But as a Realtor, how do you get the buyers to the qualifying table? There are many ways to market a home and one rather unusual one came on the market in St. Augustine last month. John and Cheryl Lee have had their home on the market for a few months and have had no offers. They’ve watched the market drift downward and noticed many sellers have reduced the price of their home in an attempt to attract buyers. The Lees wanted to try something different.
They did end up reducing the price of their home, but they are also offering a 2006 Chevrolet Cobalt with 4,000 miles to the buyer of their home.
The Lees’ Realtor, John Neighbors of Assist 2 Sell Full Service Realty, said he hadn’t seen this before.
“We have had sellers offer various incentives to sell their home, but none have offered a reduced price and a new car, said Neighbors. “If prospective buyers have a teenager or need a second car, then this incentive may be just what it takes to make the sale.”
Neighbors said his small St. Augustine company is reevaluating its marketing scheme every day and he sees that the lower priced homes are selling, which is a good sign.
“The real estate market in St. Augustine started its decline in the early fall of last year and has continued this slide for the past 12 months,” said Neighbors. “This downhill slide appears to be slowing and the number of active listings has begun to level off. The problem we face now is a huge inventory of unsold property. We’ve been on a bottom plane for a couple of months, but at least we’re taking out as many as we’re putting in. Everything should even out by the first of the year.”
One thing most Realtors said help in this market, is keeping in contact with clients.
“We continually pick up articles and try to come up with things to make it work. And we sent some of that information to our sellers,” said Neighbors. “It keeps them happy if you let them know you’re working with them. But you could hand them a Wall Street Journal article that says the market has tanked, and they’ll come back and say, ‘Why don’t we sell this house?’”
But Neighbors is quick to say that those people are just a minority. Most people understand the market is changing, he said.
Christine Williams of Exit Realty Affiliates Network said she keeps the seller informed of each marketing idea and the cost of her investment in selling the home.
“It takes more than a sign in the yard these days,” said Williams. “Additionally, I’m having the sellers get involved in the marketing. One is actually sharing the expenses in addition to paying a full commission. And, every time I see an article on the current local housing market, I forward (it) to the sellers.
For Lifestyles Realtors on-site sales agent Kim Costner, it’s networking with the Realtor community more than ever that keeps her in business.
“I offer incentives, negotiate prices, consider contingent contracts and reevaluate marketing,” she said. “I convince buyers that now is a great time to buy and that their buying power will probably never be as great as it is today. For the buyers who have houses to sell, I help them understand the current market and what is needed to have their home stand out from others. I offer suggestions like cleaning clutter, neutral paint, pricing strategy, encouraging them to preview other homes in the neighborhood for sale and be willing to pay closing costs, whatever it takes.”
Phyllis Staines of Re/Max Coastal Real Estate echoes McMoran’s back to basics rule.
“During this time of market normalization, I think it is critically important to keep sharpening the saw and improving the tools in our toolbox,” said Staines. “Anyone worth their salt in any profession continues to update their knowledge about the work they do. Doctors, lawyers and other higher paid professionals face an ever-changing world when it comes to their professions and must take classes to continue to be of service to their customers. I think we owe it to our profession to be the best we can be and to continue improving our knowledge base, which will ultimately arm us with the skills to best serve our clients.”