What’s in store for 2021?
The real estate market is just as tough today as it was in the middle of the recession. Inventory is tight. Prices are climbing. We survived 2020. But how will we make it through 2021?
If you’re scared, you’re not alone. Old strategies don’t work in this new market. You’ll need to adapt. But if you’re willing to learn some new skills, I believe you’ll not only survive but also thrive in 2021.
Let’s start with the inventory problem…
Our biggest challenge in 2021 is inventory. In almost every market across the country, inventory is so short that it has become next to impossible to get your offer accepted. It’s like winning the lottery. One team wrote 23 offers in one week and didn’t get one of them accepted.
This market hasn’t been this challenging since the recession. But the reason for that challenge has flip-flopped. In the recession, we had too many sellers and not enough buyers. Today, as we all know, we have too many buyers and not enough sellers.
Can this problem be solved? Absolutely! But before we get into tactics, let’s pause for perspective. Tight inventory will not last forever. This too shall pass. During the recession, I remember thinking things would never change or get better. We were sitting at 28 months of inventory. This is going to take ten years to fix! I was sure of it! But it didn’t. Two years later, the inventory began to swing the other way. Right now we’re at one end of a pendulum swing. Sooner or later, it’s gotta go the other way.
Meanwhile … How do we handle this? How can we navigate tight inventory?
We need to put more off-market deals together. I know working with a FSBO can sometimes be less than fun. We need to negotiate for our commission. It’s twice as much work. On top of that, it usually means navigating through the transaction as the only agent involved trying to explain things to both parties. It can be difficult. No doubt about it.
But let me ask you a question: Would you rather be one of twelve offers on a property? Would you rather write offer after offer for a buyer only to see them give up and renew their lease? Or would you rather work with a FSBO?
Personally, I would work with the FSBO. Wouldn’t you?
How do we put more off-market deals together?
How do you find the FSBOs you’ll want to work with? You can start with an online search including Zillow.com, Realtor.com, Redfin.com. But don’t forget Facebook Marketplace, Craigslist, Nextdoor, and any other local sites for FSBO’s.
Next, I would include a section in your monthly newsletter that reads, “If you see a “for sale by owner” sign in your neighborhood or as you’re driving in the ____ area, could you please let me know the address? With so few houses on the market, we have buyers who can’t find the home they need. We are doing everything we can to help our buyers find the right homes. Some people just put a sign in their yard and never make a mention online.”
Here’s another idea: Mail letters to expired listings from 2014-2017. In the letter explain that you see their home was on the market but didn’t sell; you have a buyer who may be interested. “Would you like to sell?” (Note: Agent Rise Members: We have a letter template that has yielded great results. It’s in the file section of the members-only site.)
A final idea for now: Send an “I have a buyer” letter to the homes in the neighborhoods where your buyer wants to live. This tried and true method has worked for years, and it will continue to work in 2021.
What will turn the inventory around?
Earlier I wrote, “This too shall pass.” I know what you’re thinking: Oh yeah, and how is that going to happen, Neil!?
Here are three things that COULD happen in 2021;
- Banks could ease restrictions making it easier to obtain bridge loans. I’m also hearing of some real estate brokerages coming out with plans as well. This will help many homeowners buy their new home before they sell their current home. This will help get many would-be sellers “unstuck” by getting them over the challenge of selling before they buy. Many are not moving because they fear they won’t be able to buy before they sell, and they don’t want to move twice, live in a rental, or move in with family. They want to move, but they can’t risk being homeless. So they are just stuck. This continues to shrink our inventory, but better bridge loan programs would help fix that problem.
- 10 million Americans are unemployed. Of course, that affects the real estate market. When the aid is lifted, it’s going to hurt some homeowners, and unfortunately, it’s going to force some to list their homes, increasing the inventory.
- During Covid, we printed a lot of money. Inflation drives up interest rates. That prices some buyers out of the market. As buyers leave the market, we may get to a place where we have three offers on a property instead of 15.
Those are just three things that could change market conditions by driving inventory up or changing supply vs. demand.
Other changes I see happening in 2021
Facebook Advertising for real estate agents could be affected by changes coming to Apple phones in 2021. Something that is coming soon to iOS 14 – and with that Apple will now prompt users to allow tracking or not allow tracking for Facebook applications. In a recent article from Lyfe Marketing explains, if users opt-out (and most will, because who wants to be tracked), advertisers won’t be able to track the events and conversions of those users, limiting the data we have to optimize appropriately on Facebook. This of course is all speculation and things could change before the update rolls out. We shall see.
Open houses will make a return. In 2020, Covid halted our ability to do open houses. As states begin to open, open houses will make a return. With the short inventory, they are not necessary to sell the house, but they remain a great way to get as many people through the house as possible. Of course, they remain an excellent way for an agent to build their business. I’m excited to see them come back in 2021.
Demand for home buyer webinars will continue to surge in 2021. During quarantine, many things went virtual. One of the best developments I saw take place was virtual first-time home buyer webinars and Facebook groups. Many agents tried this for the first time in 2020, and I see many sticking with it and more joining them in 2021.
Email drip campaigns will continue to lose steam forcing us to match make with buyers. NAR reports that a buyer comes in contact, on average, with seven agents before they buy their house. Which agent would you work with? (1) The agent who sends you an email with all his/her new listings? Or (2) the agent who studies what you’re looking for and calls with specific matches?