Ten years passes quickly! In 2006, the real estate market seemed to be steady if not booming. Cheery messages from brokers and NAR leaders were fast and furious. Agents just knew things would be fine and sales would come.
In the background, however, the horror of the housing and financial market crashes were taking shape. Within a few short years, the salad days of hefty retail housing sales, high commissions and move-up buyers were to be changed forever. Derivatives, extensive numbers of loans to buyers who, losing their jobs during the crash, could no longer afford the payments resulted in the bursting of the housing bubble and the wave of foreclosures during 2008 – 2012.
“Retail” real estate sales suffered as foreclosure valuations drove market pricing. Investors that had purchased many properties, leveraging each to purchase more, often lost their mortgaged properties as well.
And then we struggled even more
HUD, Fannie Mae and Freddie Mac as investors of the loans being foreclosed upon sold properties at prices that stunned neighbors and investors alike. New investors descended on areas, buying hordes of properties with cash, not mortgages, and renting them without much repair. After 2012, when foreclosures slowed and prices began climbing again, investors began to exit the market and some homes sat vacant.
Until 2014, the industry continued to struggle in many areas, yet some locales saw booming real estate prices and recovery. The shadow inventory of homes still ripe for foreclosure, underwater as their homes are worth less than current market value, still exists and foreclosures have ramped up again in 2016.
However, investors today are now doing a combination of buy/hold/rent and flip, making the homes more livable and revitalizing neighborhoods. New builds are slow to recover as builders find it difficult to build homes “on spec” and wait for them to sell.
Within ten years, much has changed, and not only in the type of buyer and the status of the housing market. We’ll review some changes here and how you can navigate more steadily the practice of real estate.
The MLS is ground zero
The MLS is undergoing massive change in its status as the guardian and repository of real estate data, and the primary way to let other agents know a property is on the market.
When the MLS was held in books – yes, actual paper books – agents would photo copy pages for buyers to see very minute detail (and minute photos) of houses for sale, or if a client was selling, of comparables. The electronic MLS came about prior to 2006, however some agents continued to photocopy printouts of listings for both scenarios.
Now the MLS is electronic, available (by subscription) to agents and brokers every day. However, the MLS is now not the only repository for home data on houses for sale, pending sale, or sold.
Zillow.com pulls MLS data from brokerages with whom they have agreement so the world can now see both active, pending (off market) and sold listings. The sold listings are simply noted as “off market” and carry the sold date and price. Now, consumers can check to see what has sold on their street or neighborhood and assess whether or not the Zestimate (an estimate of home value) is correct. The consumer can then decide to contact their agent, or an agent or broker advertising on the site. Agents pay for fractions of or whole zip codes to be listed as an agent (or broker) to contact regarding more information on a home, and the listing agent is also noted on the web page.
Rumors of a national MLS continue to rise.
And advertising has taken a wild turn
Advertising has completely changed, though some ad resources stay the same.
The MLS as noted above was once the primary method of advising other agents that a property had come on the market. Though some agents still use the 3P type of advertising (Put the home in the MLS to alert agents the home is available, Put a sign in the yard to alert the neighborhood and passersby the home is available, and Pray it sells), the digital age requires the agent promote the property using numerous methods and platforms.
Zillow.com negotiates with brokerages to carry their feed of properties available for sale. If the feed is not negotiated with the brokerage but an agent wants to place the home on the Zillow platform, it is considered “free” advertising. Other platforms also court brokerages to carry their listings.
Digital marketing can encompass email, landing web pages specific to the property address, advertising on Zillow and other platforms, advertising on Craigslist and more.
“Old-school” advertising does still work – whether it’s sending “just listed” postcards to neighborhood, sending handwritten notes as an introductory method to the brokerage and agent, sponsoring community activities, placing ads on restaurant placemats or on sports scoreboards and more.
Cold calling is taboo unless lists are scrubbed
Pulling a list of names from homes in the neighborhood was easy, and cold-calling homeowners to find people looking to buy or sell was scripted and productive. Then came the legislation against such activity by sales organizations – if someone’s telephone number was shown on a “do – not – call list” and was called by a salesperson looking to transact business, a hefty fine could be – and has been – assessed to the brokerage. This once relied-upon method of finding listings has nearly ceased in practice.
Sources exist where the lists of homeowners is “scrubbed” to remove numbers that show up on the Do Not Call list. The remaining homeowners may be contacted by phone without fear of the brokerage being fined.
A lot has changed in the last decade, but nothing so dramatic that can’t be adapted. Some of the mechanics have changed, and approaches have shifted, but the bottom line is that even as consumers evolve, the core practice of real estate still relies on diligence, negotiation, and expertise.