By Leon d’Ancona, B.T.L., M.T.L., RRESI, CEO
No matter how the housing market behaves, it is always a good time to take a hard look at business plans. Especially fondly held beliefs about what we think we know about our local real estate markets. One of the traps many realtors fall into is thinking that the whole market is weak and that all listings are moving at the same rate.
That’s like looking at the entire restaurant menu and saying, “There’s nothing to eat here.”
When people do that, they miss the bright spots in their markets. They miss delicious opportunities to adjust strategies and refocus on the merchandise that is moving to maintain and improve their bottom line.
Smart real estate professionals need to know which segment of the market is moving and what value share Starter, Move Up and Luxury homes represent. My own rule of thumb is that Starter Home values represent the first 60 percent of homes sold, Move-Up accounts for the next 25 percent, and Luxury homes represent the remaining 15 percent. As an example, let’s look at what your city might look like, where the Luxury home market outpaced the other two categories.
As a commission-based industry, it makes good sense to concentrate on what is moving, rather than stubbornly sticking to our tried-and-true segments, our comfort zones, because that’s what we’ve always done. Yet, shockingly, the preponderance of real estate professionals don’t bother to get a deeper understanding of their local market and therefore fail to capitalize on great opportunities right in their own backyard.
While Real Estate professionals preach “Location. Location. Location,” This mantra suggests that we drive the market because we as experts know where the best locations are. In reality – and in Reality® the market drives us, and we would be well advised to recognize where it’s going. By anticipating its course and concentrating our efforts and resources where they will yield the best results.
Your city may be a fascinating case in point. Are Starter homes selling well there? You bet. But its luxury homes are driving your market with a 38.3% market share in the last 12 months! You can be sure that local real estate brokers and agents who have a precise picture of market trends are adapting their listing and selling strategies accordingly.
This is a best practice that separates good agents from the “also in the business”. It ensures that the real professionals know which categories of homes they are spending their time selling or buying, no matter what market conditions are.
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Leon d’Ancona is North America’s foremost authority on real estate statistics. He is a noted speaker, and his ability to amuse audiences with his real estate statistics is legendary.
Author of The Official Guide to Home Price Changes, and many other publications. Leon is the guiding force of REality® Software, an easy to use amazing software updated every month.
He is easy to reach and is always available for clarity in what is going on in any real estate market. 877-785-4321