We Agents need to understand the current and emerging market trends. We need to understand the economic influences of our region and how that will influence the market place in the future. The skill to evaluate the present against the past in order to forecast the future can separate us from others in the marketplace.
Evaluate the total sales volume and number of sales on a year-to-date basis and against the previous year. This will allow you to see where you have been and where the marketplace is trending.
· Is the number of homes sold going up or down?
· Is the total volume increasing or decreasing?
Evaluate the number of listings taken. Remember that real estate is supply and demand influenced. The amount of inventory is the supply segment of the equation.
· Is the number of homes for sale up or down?
· Do buyers have a greater selection than this time last year?
· Is the number of homes for sale rising or falling compared to this time last year?
· Is the mix of inventory for sale the same in town homes, condos, and single-family residences? Is it the same percentage of the overall market as this time last year?
· Is there more inventory in certain geographic areas than this time last year?
If you track the inventory of homes for sale and sold homes, you will have a great wealth of information.
An example is when; earlier this year I led a coaching call with a client in San Diego who is a Champion Agent in that marketplace. The inventory levels have changed rapidly in that area; the marketplace in San Diego has seen rapid increase in inventory of homes for sale in the last year. That has caused the media, consumers, and even Agents to portray gloom and doom across the marketplace. While the days of the home selling within twenty-four hours of listing, with multiple offers, over-asking price, and with escalator clauses is gone, the marketplace is still a great one.
Champion Rule: When inventory of active listings increases, most people panic.
The average Agent will have a fit when the inventory increases. The reason is that it signals a change in the marketplace. The media will pick up on the inventory increase and start broadcasting the change as gloom and doom or the "bubble bursting." This further increases the consumer's negatively against the real estate marketplace.
When my client and I compared the current numbers against the previous year's numbers, there were some startling facts that were contrary to the gloom and doom prognosticators. Inventory had increased by 68% in his service area. Certainly, the increase in inventory would influence the marketplace. At the current rate of growth of the inventory, the marketplace would eventually have price and value corrections.
The list price to sales price in the marketplace, however, was still solid and respectable against historical standards at 96%. Now, against a marketplace where everything was selling above asking price, it was a change, but against the long-term view, 96% is a good number.
The days on the market average for homes that sold was sixty-one days. What that told me is that a home priced competitively would sell in a reasonable period of time. The truth is sixty-one days is not a long days on the market number.
The sold properties monthly is what really clarified the picture. The sold properties were within a few homes either way each month for the last eighteen months. When the marketplace was explosive, there were about the same amount of sold properties per month as there were right now. The sales had not dropped in his market area.
The net result was that homes were still selling. The sellers were still getting close to their asking price in a reasonable period of time. The key is that the seller could only achieve a sale through being competitive on their price. With the high inventory levels, compared to a year ago, there is more competition but the competition that is there has not position itself competitively via price to win the game. The truth is most of the Agents are doing their Eeyore impression. The media and most consumers are wrong about the marketplace. My client is one of the few in the marketplace who has the correct view of the overall picture.
Evaluate average sales price this year versus last year.
· Is it going up or down?
· Is the marketplace depreciating or appreciating in value? Don't waste your time tracking that on a monthly basis. It is too short a period of time to detect a trend. Calculate this statistic on a quarterly basis.
· Is the inventory aligned with the demands? We need to know if we are experiencing a net gain per month or net loss in the inventory levels.
Evaluate the percentage of appreciation for average sales price last year versus this year.
· Is the appreciating percentage decreasing or increasing compared to the same time last year?
· Is the marketplace gaining or losing strength?
To be a Champion Agent, you must have greater marketplace knowledge. I find that, through marketplace knowledge, an Agent can increase their credibility and trust with a prospect and client.
Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies®, Successful Time Management for Dummies®, and over 300 articles in print.
Real Estate Champions is a premier coaching company. Training covers a wide spectrum from new agents, to seasoned, as well as those interested in real estate marketing or real estate investing.
You can get more information at Tough Market Domination, Scripts & Dialogues
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