As a southern-state resident I, like many of my compatriots, am incredibly excited about spring.
The winter has been somewhat literal and also figurative this year as we have inched towards greater economic stability.
Not quite Game of Thrones bleak, end of day winter, but it’s felt like a bit of a battle in many parts of the country as we have attempted to move ahead of the next micro-cycle.
But the battle in most cases has been that of perception versus reality.
What I mean with that statement is, with the lag of information flow, if a typical homeowner receives most of their information via the 6pm news, they could be forgiven for perceiving a bad market.
This is particularly difficult to navigate as we now see the country behave in a more normal fashion, meaning the real estate market is not the same in every state, city or suburb right now.
I’ll tell you a story, a solar battery salesperson called me a couple of months ago.
He was also an Adelaide resident and upon learning of my industry, made the comment, “It’s a bad time to be in real estate”.
I asked him why he felt that way and he followed up with the statement, “Well the market is terrible right now!”
I wondered how someone living in one of the few cities that had almost defied the pricing correction and in fact had the greatest price growth (up 6.7 per cent year-on-year) in the whole country could have that perception?
In some states, we have seen, with the end of winter, the release of the stock brake.
Although, in every capital city, we actually have fewer new listings than at this time last year.
Anecdotally, that feels different from coast to coast, with the Sydney-siders noticing a definite influx of new listings, while Brisbane and Perth are gasping for stock, with demand outstripping the supply.
The paradox to all of this however, is that although median prices are up and listings are increasing, we are failing to process stock as efficiently as we are listing it and we are starting to stockpile.
What does this all mean? We are attempting to balance the scale of stock in and stock out process.
I’m sure we all like to think that we can efficiently manage a consistent pipeline of new listings, with a steady stream of sales within a timely fashion, but the reality is that, in most cases, that isn’t true.
Think about the telltale good-month, bad-month real estate rollercoaster that is proliferated by many in our industry.
The reality is, most people are good at focusing on one thing at a time and, as real estate agents, that is usually in reaction to the market cycle.
Listings are tight; we double down on marketing, calls and appraisals.
Stock builds up, we shift to concentrating on driving traffic, obtaining price reductions and converting to auction, (and usually at the sacrifice to the stock-in process).
When the market is showing signs of challenges both to stock-in and stock-out, how do you manage that?
The only answer is in understanding your critical metrics for success and adhering to delivering those irrespective of what that commitment means.
Here are the key elements to maintaining flow around stock in and out within your business:
Maintaining a consistent number of appraisals each month
I spoke in my last article about the importance and purpose of an appraisal.
Through the nuanced market over the past 12 to 18 months, the agents who have achieved the greatest growth have been those who have committed to achieving their appraisal targets.
Rather than accepting whatever you can get, striving to hit those targets is key to maintaining a consistent number of listings each month.
This may mean that you need to make more phone calls and cast your net further in order to achieve that, but that is the reality.
Write down your appraisal target.
Report to your leaders and team mates each month around your performance against those targets.
Goals are much more successful when they’re written down and shared with your peers.
Deliver a consistent number of traffic to your stock
The continued heat of the market in some areas is delivering a good amount of organic buyer traffic to many properties.
However, as things become more nuanced, you may find your inspection numbers start to drop.
The best in our industry understand that a certain amount of buyer traffic per property is critical to obtaining enough market evidence for your sellers to understand the sentiment around value.
If it doesn’t come organically, your job is to drive traffic to your property.
Our market leaders will do this pre-emptively, making sure to call buyers and local homeowners before the first opening, with the understanding that the first seven days in a campaign are the most critical.
Maintain a high standard and frequency of vendor communication throughout
In every sales training session on vendor management I ask the room, “How often do you talk to your vendors during a campaign?”
Frequently you’ll hear, “Every day”, although we know that not every agent is talking to every vendor every day.
Why is that?
Typically, an agent will start with strong communication that will dwindle over time, when their own energy towards the campaign dwindles as the likelihood of making the sale seems less possible.
Interestingly, as the market shifted at the end of 2021, there was a behaviour change that came in almost immediately to the hardest hit markets, particularly throughout New Zealand where markets did a 180-degree change overnight.
That change was around the delivery of weekly vendor reports and conducting weekly vendor meetings.
The latter being cited as the most impactful habit change.
Ensure you structure your week to allow for weekly vendor reports to be written and delivered and then followed up by a physical meeting with your clients.
You will get the greatest shifts when these are done in person.
Review price weekly
It’s easy to get swept up in the commentary above about new peak prices, as it is easy for your sellers to do the same.
However, it’s important that the professional engaged to facilitate the successful sale of the property doesn’t become the barrier to that sale due to an irrational attachment to achieving a certain price.
Each week, it’s imperative you review market feedback and how that sits against your own estimation of what the property would sell for today.
These conversations must then be extended to the vendors so they have the opportunity to review the pricing strategy.
There is no minimum time frame to wait before introducing a price review, once you have evidence to support a new pricing platform, you must discuss this with your sellers to give them the best opportunity to capitalise on market conditions.
Monitor your days on market
Days on market can begin to creep out without being noticed at first.
You go from selling in two weeks to three, then from 30 days to 45.
What’s the problem as long as you get it sold, right?
Unfortunately, allowing your average days on market to blow out can cost you more than that individual sale.
While we know that the longer a property sits on the market, the less likely that appointed agent is to make the sale, there’s also the opportunity cost associated with this change in your business.
If each property takes longer to sell, essentially you will start to hold onto a greater number of listings.
More time spent on vendor management, open inspections and buyer call backs per property.
This takes time away from working on the flow of stock in.
Increased days on market almost always accompany lower annual listing numbers.
Be prepared to pivot
The scientific community describes holding all knowledge on the tips of its fingers, meaning that if a once held and proven theory is then disproven, a scientist should let go of the former thinking and evolve.
The same is true for your sales campaigns.
If the strategy you are employing isn’t working, you must make changes.
This can involve a variety of strategies, but most frequently will include reviewing pricing strategy, marketing effectiveness or adjusting the method of sale.
Taking a stagnant ‘for sale’ campaign and repositioning it to a no-price auction campaign does wonders for piquing the interest of buyers.
As Warren Buffet said: “Only when the tide goes out do you discover who’s been swimming naked”.
It’s time to put on your swimsuit, slap on some sunscreen and while you’re there, grab a snorkel too.
The market is likely to move as the tide with the occasional high tide and sudden low.
You need to be prepared for challenges to both your stock in and stock out strategy, hopefully monitoring the metrics above will help you stay afloat and finish the year with a healthy balance.