Posts tagged: marketing in real estate

The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

• 2006 – Prices hit the Top
• 2006 to 2012 – Prices Decline
• 2012 – Prices hit the Bottom (Trough)
• 2012 to 2019 – Prices Rise*
• 2020 – Prices hit the Top
• 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.

My, how things have changed – quickly! If you’re still investing, I’d love to hear how you’re adjusting and what you see for the future. I’ll start with some of the Covid changes we’ve already made.

NOTE: Much of what I share is what we’re already experiencing and changing in our own business. Much is based on our 2008-2010 real estate investing experience.

1. Don’t stop. Historically, real estate always works, you simply need to adapt to market changes. Therefore:
   • stay flexible
   • learn about and secure funding
   • stay involved in online networking groups – both local and national – to stay abreast of changes you need to be aware of as they happen.
2. We’ve increased our marketing. Why?
   • People are going to need money which means selling their personal or family members’ properties. We want to be available when a need arises to offer what help we can.
   • There are fewer investors buying already because of fear of the future and lack of funding, so there hasn’t been a better time to be in the market in years!
3. Get educated. What we’ve seen recently is exactly what we experienced in 2006-2007; everyone was getting into real estate investing because it was so easy. As the business becomes more difficult now, those who are prepared, informed, and educated have incredible opportunity.
4. Buy for less. We all know the future holds uncertainty. Price values may drop greatly in the coming months/years. Sellers know that, too, which is why many will want to sell sooner rather than later. They also realize that you’re taking on their risk when you buy, so they understand when you offer less than they hope for. And, it’s true, you are taking on risk. Make sure when you make an offer that it’s a price you can live with if the value drops over the next 3-6 months.
5. Properties are still selling well, so buy properties you can turn quickly – this is not a time to buy large rehabs!
6. Buy and sell virtually. This is the perfect time to learn how to transition your business to virtual. We are currently doing due diligence online, asking permission to walk around the property and take photos, then asking the seller to either send us interior photos themselves or to leave the property while we enter and take photos. Sellers appreciate our concern for their well being. We are requiring that they allow a property walk-through before closing to insure their own photos do not omit something we should know about.
7. Prepare for longer days on market when selling. Watch your local property days-on-market to have an idea of what to expect. As lenders begin to dry up and/or increase their borrowing requirements, there will be fewer qualified buyers and both selling and closings will take longer.
8. Expect lenders to tighten borrowing requirements.
   • We’ve already seen private lenders stop lending due to fear of future risk and a need to keep their funds secure for themselves.
   • Many hard money lenders have stopped lending all together because they were bundling loans and selling them. Those loans are no longer being purchased, so those lenders are no longer lending.
   • Banks have stopped offering jumbo loans, which means they’re already concerned and responding.
   • Pretty much anyone still lending has begun requiring that the borrower has more funds on hand, higher credit score, and is a stronger applicant all the way around. Plus, they’re increasing points and interest rates.
9. Higher priced properties will be the first to slow, so focus on the properties that are below your area’s median price point (and know what that price point is!).
10. Expect this “event” to last for a while – possibly years. In 2008, the common response was that the worst was over and things were going to start getting better. “Things”, however, continued to get worse.

Remember, we’re very early in the “new reality” and what’s coming is hard to predict. Stay aware, stay flexible, stay informed, stay in touch with other investors. There’s always money to be made in real estate.

Do you agree/disagree with what I’ve shared?

What changes have you made or do you plan to make going forward?

There are many benefits to opening a house for sale on a Sunday afternoon. It saves having to make an appointment to see it, and it makes it convenient for everybody in the family to come together to tour properties. The seller benefits by having more people see the house in one afternoon instead of individual appointments. Most of the time however, visitors dismiss the help offered by the Realtor hosting the Open House and are reluctant to provide any information or ask any questions.

When visiting my Open House, do not be shy! ask questions and listen carefully, the information you need to make an informed decision is right there in front of you! I am the “Mobile Real Estate Information Center” and I am here for a reason: I want to give you all the information you need to help you purchase a home, maybe even this one.

I know this house very well, I know when it was built, how long it is been on the market, what type of inspections are available, what type of work is needed, why the seller is moving. I also know the neighborhood well, ask me about proximity to schools, shopping centers, public transportation, demographics, theaters, I also know exactly how far is the library or the post office for example.

Before the Open House I print and bring with me a CMA (Comparative market Analysis) of the property so not only can I show how this house compares to others in the same area, but also what other houses have sold recently in the proximity. If this particular house is too big or too small, I have a list of other homes available for sale, I can share some addresses with you right there and then.

I might even have valuable and timely “inside information” of homes about to come on the market, bank owned or foreclosed properties that I know are going to be listed soon. This information is potentially profitable for you Mr./Ms. home buyer… Just talk to me!

Even though I am not a loan officer, I know what the prevailing interest rates are and can quickly calculate your monthly mortgage payments with taxes and insurance, I can give you an idea of what your closing costs would be, I can even pre-qualify you on the spot! If I know what type of financing you need, I can tell you what type of documents you will need to get ready.

I am NOT just a Door Greeter, I can talk to you about investment properties, I can tell you some of the biggest tax consequences and/or benefits of owning a residence or an investment property. I can highlight to you the benefits of a tax deferred 1031 exchange and much more.

For me being at an Open House is like bringing my real estate office out on a road trip… Who benefits the most from my experience? Those who dare to talk to me about their real estate goals and dreams, you can pick my brain, I am committed to stay on that house for 4 hours so take your time!

Studies have shown that people are far more relaxed and willing to communicate with others on a weekend, they are more autonomous, they have time to slow down. Do not rush through the Open House, slow down and take full advantage of my 25+ years of experience and knowledge, it is all there for the taking! If you are not in my area, call me and tell me where you want to go, I will then put you in contact with the most active professional Realtor in that area… for FREE!

The leasing of a shopping mall is a specific strategy relative to the location, the property type, the customer demographic, and the landlord. All factors come together to contribute towards a successful leasing outcome and tenancy mix.

It should be said that a successful leasing strategy will contribute towards the greater the benefit of the property. More customers will be encouraged to visit the property and purchase goods or services. On that basis retail leasing is quite special.

Here are some tips to help you with leasing a retail mall in today’s property market:

1. Understand the vacancy factors that apply to the precinct or location. An excessive number of vacant tenancies will have an impact on market rentals and incentives. Check out the factors of supply and demand that apply within the region. Look for any new property developments that could have an impact on tenant movement and market rentals.
2. Understand the types of incentives that can be offered by the landlord to attract tenants. Also understand the requirements of tenants when it comes to incentives in today’s market. Any vacancy that you have available for lease needs to be matched to the prevailing market conditions. That will include the rental types, and the incentives offered. The landlord needs to adjust to the prevailing market conditions. Get some details of comparable rentals and other properties nearby to help the landlord understand the packaging of their vacant tenancy.
3. It should be said that a lease incentive cost should be recovered through the rental structure over the lease term. In other words, any money that is lost or offset in the incentive availability should be recovered by rental growth and escalation across the lease term. You can do this calculation through an assumption of market rentals and a discount cash flow calculation. The net present value of the deal can be compared across the duration of the lease.
4. Successful leasing executives usually have a substantial database of retail tenants to contact. Any new leasing opportunity can be offered through the database to targeted tenants, anchor tenants, retail specialists, franchise groups, and other industry professionals. Any vacancy can be directly marketed to these groups through cold calling, direct contact, e-mail marketing, and direct mail.
5. It is acceptable and normal to market a vacant tenancy through the generic media. That will involve newspaper advertising, and Internet listing. There are costs associated with that marketing activity and the landlord should contribute towards those costs.
6. Most successful leasing transactions occur through the involvement of the leasing executive and direct marketing to the right people. I go back to the point that the database for each broker or agent is quite important to converting more commissions and listings.

It should be noted that any quality property in a good location will create good inbound enquiries. If you are selective with your property appointments and vacant tenancies, you will create more churn and activity in property leasing.

Trying to list FSBO’s? Here’s what your marketing needs to stress.
You know why home sellers are trying to sell without your help. They think they’re going to save a lot of money. And to be absolutely honest, those who know what they’re doing, have nerves of steel, and who don’t need to go to a job every day can come close to doing what you can do.

As for the rest of them… your marketing needs to gently point out that they simply don’t know what they’re getting into!

No, you can’t say that. Making a would-be client look or feel foolish is definitely not the way to earn their business. So you need to be gentle in your presentation.

You need to offer some help in the form of tips, or perhaps clue them in about the various disclosure forms they’ll need. You might offer some advice about how to steel themselves against the insults they’ll hear as buyers try to push the price downward. (I used to laugh to myself about the comments buyers made to me. Sometimes I wanted to ask why they wanted to buy the house since they hated it so much.)

And of course, you need to remind them that buyers will try to point out that they’re not paying a Realtor so naturally they can sell the house for less.

Before embarking on do-it-yourself home selling, homeowners should ask themselves:

• Do I know how to determine their home’s value in today’s market?
• Am willing to work with and pay a buyer’s agent?
• Do I know how to market my home and get it in front of enough buyers?
• Can I deal in a civil manner with people who severely criticize my home?
• Am I willing to demand that buyers reveal their financial situation before I take my home off the market to negotiate with them?

You should touch on all these points when you’re talking with FSBO sellers, and you can incorporate them into a special report or a series of real estate letters to mail to them. If you enjoy writing and have a few extra hours you can create letters that are uniquely yours.

If you don’t enjoy writing or don’t have extra hours, you can buy pre-written real estate letters and just get busy sending them.

Either way, real estate letters written in this manner are a soft-sell technique that will position you as a non-pushy, non-threatening agent who knows how to sell homes. With each letter you’ll become more of a trusted adviser, so that when they do decide they need help they’ll naturally turn to you.

But how do you first contact these people?

One way is to offer the special report on your website. Visitors opt in to get the report and their addresses are automatically entered into your auto responder to receive the letters.

You could write down addresses and try to locate the names to go with them, or (Please, no!) write to Dear Homeowner. I personally think you should use an opt-in on your site even if you take the hands-on approach… which is to get out there and meet the people.

I know – that can be a little bit scary. But if you decide what you’re going to say ahead of time, and practice it, it will get easier.

Write a script that sounds natural to you. Something along the lines of “Hi, my name is Sally Jones from ABC Realty. I see you’re offering your home for sale by owner and I stopped by to ask if you were willing to let buyer agents show it to their customers.”

If you say it all at once, they won’t have a chance to say “I’m not listing” and slam the door on you.

Some of them may not have thought about the fact that some buyers want agent representation, so at this point you may need to explain the procedure. If you have a buyer list you mail to, you could mention it. If you use a one-time / one-party listing agreement, do mention that as well.

If they say yes, they’re willing to work with buyer’s agents, do ask for a tour and do take notes. You could even snap a picture to go with the notes.

The important thing is that you don’t ask for the listing at that time. (Not unless they throw themselves at your feet and beg you to take over this horrible job they got themselves into. In that case you must be a good samaritan and help them. )

If they say they don’t want to work with buyer agents, be polite and friendly and say “OK, I’ll let the others in my office know so they won’t bother you.” You might also throw in something complimentary about the house and tell them that if they change their minds to let you know, because you’d sure like to show it. Give them your card, of course.

Before you leave, tell them that you have a special report with tips for owner-sellers and you’d like to send it to them. That gives you the opportunity to ask for their names. You probably should also ask if the house address is their mailing address, since some people do prefer post office boxes to home delivery. Mail the special report as soon as you get back to the office, and enclose a nice little handwritten note thanking them for talking with you. If you can come up with something more personal to add, do it. For instance, if they were about to leave for a child’s soccer game, say you hope their team won. That’s just to show that to you they are more than just a house address – you noticed who they really are.

Be sure to enclose another card just in case they tossed the first one the minute you left.

Then, every few days send along a new real estate letter with a new bit of advice that will be useful to them. Do end each letter with an offer to help should they decide against doing this on their own.

The best, finest, and most meaningful/ relevant way, for real estate agents, to explain, professionally, their reasoning, marketing and selling plans, is to create a thorough, Competitive Marketing Plan, or, CMA, and explain it thoroughly, to their potential, and existing clients! This must be, more than, merely, a cursory, explanation, and examination, of home prices, but, rather, must become a key part of the strategic and action plans, which will be used, to bring forth, the best possibilities! As a Real Estate Licensed Salesperson, in the State of New York, for over 15 years, I have prepared innumerable plans, and consider them, to be one of the most important documents, and steps, in making the process, smarter, better, easier, less stressful, and faster. With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 6 important components/ factors, in preparing, and taking advantage of a professionally designed, Competitive Market Analysts.

1. Market trends/ conditions: It’s important to create a strategy, based on specific, local, and/ or, regional trends, and conditions, because what works in one place, may not, in another. What are some of the local nuances, etc, which might impact the marketing strategy, as well as Listing Price, etc?

2. Recent sales: It’s not enough, to, merely, examine and consider, recent sales, and/ or, Listing Prices! Selling prices must be examined, carefully, and the more current, the closing date, the more significant! One must, however, carefully, compare, a variety of features, including the specific block, local schools, community safety, specific home features/ inclusions, etc.

3. Expired Listings: This process must include considering Expired Listings, and the probable reasons, they may have not sold! If there are a lot of these, it indicates one thing, but, even, if there are fewer, a common link, should be searched – for, and examined! Perhaps, the reason was pricing, and, if so, should provide key information, in preparing the document.

4. Features/ condition/ upgrades/ lot and house size/ specific block, etc: Avoid comparing apples, to oranges! Take into consideration the included features, and value of these! What is the overall condition of the subject property, compared to the competition? What upgrades have been made, and what is the impact of these? Be certain to consider, both, the lot size and shape/ usability, as well as any advantages, and/ or, disadvantages of the specific block, etc?

5. Specific location: Compare specific locations, and the pluses, and minuses, of each. How might these affect pricing, etc?

6. Know your client: Before, any agent/ client relationship, it is important, for a real estate professional, to know, and understand his client, and, be able to thoroughly, completely, communicate, on essential marketing and selling strategies. The CMA will only, make sense, and be effective and meaningful, if/ when, an agent and client, work together, and take advantage of quality teamwork!

Since, for most people, the value of their home, represents their single – biggest, financial asset, doesn’t it make sense, to proceed, wisely, and in a well – considered way? Before hiring an agent, carefully examine, the professionalism, and thoroughness, of the Competitive Market Analysis!

The United States real estate market is growing faster then ever before. Sarasota has become a pre-construction real estate hot spot. Pre-construction is the most profitable phase of investment in real estate. New construction offers a wider choice of location and layout, with the most desirable finance options. Pre-construction is considered a healthy investment, making investors wealthy beyond their wildest dreams. Investors in pre-construction real estate are willing to take bigger risks for a chance to make huge profits.

Sarasota has for long been an upper class vacation destination with its pristine white beaches, exciting nightlife, 5 star restaurants and hotels, and its interesting mix of cultures. The Sarasota pre-construction market has witnessed a boom in the last few years. There are downtown condos, beachfront high-rise condos, single-family residences and mansions under development. Sarasota is a sellers market and most properties remain on the market only for small period.

Prices of Sarasota real estate in its pre-construction stage are significantly lower and more affordable to the investor. Pre-construction sale has shown a significant increase over the years and continues to grow. Investors have the advantage of not having to pay any local and state taxes for many years.

Pre-construction deals are usually not advertised in the initial stages. Deals are mostly brokered via a network of estate agents who sell directly on behalf of the developers. Brokers reserve a number of units for their top clientele. The second stage of construction brings on a 10% increase in price. On selection of a property, an investor pays a deposit of around 10% of the purchase price. An additional 10% is usually paid within the next three months. Investors are able to sell their units within a year at a profit of 20% or more.

The increasing interest in Real Estate investment trusts shows that real estate investment return is becoming an important part of a Sarasota investor’s investment portfolio.

As a real estate agent, your success in attracting listings is going to be faster if you have a lot of signboards placed on properties in your local market. Quite simply, the more the local people see your name on signboards the more they will identify with you and remember you when the time comes to sell.

No vendor wants to list their property for sale or lease with an agent or salesperson that is unknown. For that reason when you start off working in the industry or when entering a new area you should do a lot of work in the first few months to build your name. It’s called personal branding. The most successful salespeople have it. Most other salespeople have little of it.

When you start to build your brand you should regard it as an ongoing task that will not stop. The bigger your personal brand, the better things will be for you.

It sounds simple as a base concept in territory management and selling real estate. However such a principle needs to be stated again here as it is overlooked by so many. In absolutely all respects your success in real estate sales is almost totally up to you and how you market yourself.

So now let’s go back to the point of putting lots of signboards into your real estate market. Here are the rules to the process:

1. Getting them placed on properties located on main roads is very important as it will give you free advertising.
2. The signs have to be of similar branding and colour to build consistency and image.
3. Always put your name on the sign boards and include a mobile phone number for out of hours contact.
4. Keep the signboards free of graffiti as that will send the wrong message to the other vendors in the area.
5. Within reason use the maximum signboard size that the local council will let you use.
6. Put some property reference number on the sign so the person calling can easily identify the property to you.
7. The sign has to be located in the best position on the property so it is seen by passing people and traffic.
8. Make sure the sign is secure so you do not have a damages claim from a falling sign.
9. If possible use a photo sign that features your photograph as well as some photo from the property. This will also help with your personal branding.
10. When something is sold or leased, make sure you get a label placed on the existing sign so the market knows of your success.

When correctly approached your signboard strategy can go a long way to helping you build market share for your real estate office and you personally. That signboard will attract more listings and inquiries your way. A very good outcome when you work on commission.

1. Advertise! A study conducted by the National Association of Realtors revealed that 92% of buyers use the internet to house hunt. Make sure your open house dates are available through Zillow. With over 130 million visits per month, Zillow is a great place to start.

2. Invite neighbors to a appetizers or a wine and cheese party at your open house. It’s a great way to network and prospect. Socialize and have fun.

3. Everyone who visited your open house is a potential buyer so create an automated nurturing email marketing campaign to stay in touch. Make sure to also follow up within a few days so you can reconnect and help with their home buying search.

4. Be strategic with open house signage. Sandwich boards are great, but also mix it up with signage that is legible from a distance of at least 30 to 50 feet. Place directional signs to advertise in a five block radius ro reach a wider audience. Add helium filled balloons to attract attention.

5. Depersonalize the property. Remove family photos, diplomas, awards and anything else in the home before the open house. By removing personal items, the home doesn’t belong to any particular group of people and visitors can see themselves in the home.

6. Clean and organize closets and other storage spaces. Buyers will open closets, drawers and anything else with a handle. Instead of an avalanche of boxes when they open the storage closet, make sure closets are clean and organized.

7. Target local homebuyers with online advertising. You can even target potential buyers according to zip code through Google AdWords, Bing, Facebook and other online resources. With Facebook, you can add photos of the property and link to a landing page where more images of the home are available, plus a contact form to learn more.

8. Advertise by drone. Yes, drone advertising. Hoovy advertises open houses by attaching banners to drones and flying them in public places for real estate agents. Hoovy flies the drones at about 60 ft from the ground to be closer to the public.

9. Staging can help sell a home. Group your colors. Try to limit colors to just three per room. Keep larger items lower. If you have an even amount, take one away. Always keep quantities to an odd number as it is more visually appealing. Mix throw pillows and to create a spa appeal, add white towels to bathrooms.

10. First impressions are important. Simple updates to the entry can make a world of difference. Add a planter. If the door is worn, a good coat of paint can make a difference. A new welcome matt will make it more inviting. Sweep, clean cobwebs and remove anything worn.

11. In one study, 30% of people reported scented products as “irritating.” Skip the air fresheners and candles. Instead, encourage your seller to shampoo carpets, open the windows and let in the fresh air, deodorize appliances and toss throw rugs in the wash.

12. Experiment with lighting before your open house. Try opening shades and curtains, turning on different sources of light.

13. Advertise in small local newspapers as not every buyer is internet savvy. Many retirees read local papers and you’ll get a lot of mileage for your investment.

14. Consider a themed open house. If the home is Mediterranean design, consider presenting tapas. If it is a Spanish style, nachos may be perfect. Give your potential buyers a unique experience to remember the home.

15. Have handouts with your contact info ready for buyers to take. Mortgage Loan Breakdown and a glossary are two great handouts. Neighborhood information like local schools, grocers, restaurants and the “walk score” are great information. And attach your business card to every handout. Have a sign in sheet for visitors and capture their name, phone number, email and any other pertinent information. Follow up a few days later.

16. Email prospective buyers and invite them to your open house. Showcase the home in the email and include a professionally branded email signature. And offer to preshow the home. Why wait? Give prospects the ability to schedule time with you to tour the home early. Add an online scheduling link so buyers can set a time without fussing with the phone, call backs and waiting. After all, in this competitive market, the home could be pending by the time the open house arrives!

SAN DIEGO, CA – “Buy low, sell high” is a well-known adage attributed to the legendary billionaire investor and philanthropist Warren Buffett. Looking at today’s super-hot residential real estate market is hard not to wonder how much longer this craziness will continue.

Buyers are in bidding wars to buy homes, multiple all-cash offers with no financing, no contingencies, sale prices tens or even hundreds of thousands of dollars above asking prices, double-digit annual home price appreciation, and a very low inventory of homes for sale.

According to the Case-Schiller Home Index, the average annual home appreciation in the 20 major metropolitan areas was 14.6% year-over-year as of this past May. Phoenix had the highest annual price increase of 22.3%, followed by San Diego’s 21.6%, and Seattle at 20.2%.

I vividly remember that back in 2005-2006, at the peak of that last super-hot residential real estate market, many were saying that the market would continue to thrive and prices would go up for at least another ten years.

Yet, by 2007 the home prices started to deteriorate and by 2009-2010 a wave of short sales and foreclosures dominated the previously super-hot markets. The hardest hit places like Phoenix and Las Vegas had property values depreciated in some cases by over 50%.

But this time it will be different… not. If there is one thing certain about real estate (and life in general), it is that it is cyclical. Every boom is followed by a bust, and every bust by eventual recovery and then another boom, etc.

In case of real estate, cycles are usually much longer than those of the general economy and they last, on average, about 15 years. In this particular case, it is important to note, that we are discussing a residential (homes) real estate cycle, which can be quite different from a commercial (investment properties) real estate cycle.

So, where are we today? The interest rates, including on mortgages, are at ultra-low levels. For example, recently our sister mortgage company closed a 15-yr fixed rate loans as low as 1.99%. This is quite remarkable given that the inflation rate is sky-rocketing. Just this past June, the inflation jumped by 5.4% year-over-year.

This was the largest increase of inflation since 2008. At this pace the U.S. is on the trajectory to have a double-digit inflation by 2023. Compare that to annual inflation rates of just 2.4% in 2018, and 1.8% in 2019, and 1.3% in 2020.

Money supply, government debt, and the public spending by the Federal Government are enormous. It seems that not too long ago, when the politicians were arguing about the federal budget, they were talking about millions, or at the most billions of dollars. Now if it is not a trillion, it does not seem to be a big deal.

The U.S. unemployment has been steadily improving since its peak of 16% in May, 2020. As of early June, the unemployment rate was around 5.9%. However, these figures can be misleading as they don’t include folks who are “under-employed,” e.g. went from a full-time to a part-time jobs, or those who earn less now than pre-pandemic.

Additionally, they don’t count workers deemed “permanently unemployed” (unemployed for more than six months) and those who “stopped looking for work”. The “real,” or the so called U6 unemployment rate, is around 9.7%.

So, how all of this translates into the residential real estate market? The current real estate cycle is about 15-16 year old, which is worrisome, but basically, as long as the money is so cheap, buyer demand so high, and supply of available homes for sale so low, the “music is still playing.”

Furthermore, we should not underestimate the “Covid-effect” on housing. One of the reasons why homes became so valuable was because of the lockdowns and the resulting work-from-home, teach-from-home, play-at-home and eat-at-home paradigm shifts.

If the cycles are the law of the universe, then it is safe to assume that this cycle must change too. When? Nobody knows for sure, as we realize that the cycle has changed only after it already did.

However, in my estimation, the catalyst for the change will be an increase of the short-term interest rates by the Federal Reserve, which sooner or later will have to happen given the high inflation.

Our real estate brokerage receives lots of inquiries from buyers and investors wanting to purchase properties. In our opinion, real estate buyers should proceed with extreme caution in such an over-heated real estate market.

The double-digit annual price appreciation is absolutely unsustainable as the real wage increases are in the low single-digits. It is important to understand that real estate is not a very liquid asset and there are substantial costs associated with selling it.

For most residential property owners, real estate should be a long-term game and buyers should take that under consideration when considering purchasing properties. When the inevitable market correction comes, home equity can be greatly reduced or even wiped out in case of highly-mortgaged homes.

In such instances, property owners can find themselves “upside down” on their mortgages, meaning they will owe more than the values of their properties. Short-sales and foreclosures will become familiar terms again.

On the other hand, the lucky residential property owners who currently own highly-appreciated real estate assets, maybe in a perfect position to cash out on their equity now when the market is hot and the prices are high (remember what W. Buffett said).

Residential home builders, especially those who build in the lower price ranges with projects that are already going, or about to go vertical and will deliver completed homes in the next 12 to 18 months, are in good shape because the current buyer demand far exceeds the supply.

However, past that time frame, it is anybody’s guess. Exorbitant prices of materials, high costs of land and labor, and onerous government fees make it hard for builders to deliver affordable houses and make a profit.

There could be another important consideration for selling sooner than later: Uncle Sam. The current administration openly talks about increasing taxes and in spite of their election promises, it is not going to be affecting only the “rich.”

For example, according to their latest tax proposals, the home-owner exemption from the capital gain taxes when selling primary residences, may be greatly reduced or even entirely eliminated. Oh, by the way, the capital gain tax rate is also going up.

Another significant tax change on the horizon for those who own any investment properties, even if it is a small rental house or condominium, is a proposal to reduce or eliminate the so called “1031 Tax Exchange” under which capital gain taxes can be deferred on investment properties, including small and large rentals.

Each situation is unique, but my general advice for Clients who want to buy real estate now is that there needs to be a compelling reason for them to do so. I recommend being patient and not buying into the frenzy, which sooner or later will pass.

Again, let us remember what W. Buffett says about buying low and selling high, and he certainly has a track record (and the bank account) to prove that he knows what he is talking about.

For Clients who own real estate and want to hold it for a long-term, I recommend that they review their mortgages and interest rates (if they have any loans on their properties).

If beneficial, they should look into refinancing them, with or without a cash-out, to take advantage of these extremely low interest rates, which at this point are way below the inflation rate, which makes them practically a “free money.”

For Clients who are considering selling or have shorter term ownership plans, this might be a great opportunity to review their properties’ values and determine if selling now, while the market is super-hot and the prices are super-high, is a good idea.

In conclusion, nobody knows what the future has in store, but a couple of things are certain: real estate is cyclical and change is inevitable. The current residential real estate market cycle is mature, prices are very high, and thus it is reasonable to expect a market shift.