The outbreak of COVID-19 has already changed the ways brokers are doing business. Even if your local market is still hot, you’ve likely had to work around social distancing safety measures and make use of online tools to market your listings and continue working with your buyers.
But with economic indicators signaling that the 2020 recession may have already started, smart brokers are planning ahead for slower housing markets. Qualified buyers are often more difficult to find during a recession as lenders tighten their requirements. And sellers may be less motivated if property values start to slip.
So what can you do to keep your pipeline full of clients as your market slows? Here are three clever ways to find buyers and sellers in a slow housing market.
1. Focus on Expired Listings
When a listing expires without a successful sale, homeowners are typically disappointed with the original listing broker and want to find a new broker who can get the house sold as quickly as possible. And during a recession, when listings sit on the market longer and are more likely to expire, there is greater opportunity to convert expired listings into new clients than in a strong market.
Contacting the sellers as soon as the listing expires is key. You want to reach them before other brokers. Then show how you’re different from the first listing broker. What can you do to more effectively market the property and make sure it sells this time around?
Don’t forget to ask the sellers about their next steps. They may need your help buying their next home. And even if they’re moving out of the area, you might be able to earn a referral fee by referring them to a broker in their new city.
And make sure to notify your existing buyers of this listing; the sellers may be more motivated now than when the home was originally listed.
2. Help Homeowners Avoid Foreclosure
When homeowners are unable to pay their mortgage, you could help them avoid foreclosure by selling the home. Sadly, this is a common occurrence during a recession.
The Great Recession of 2008 saw many homeowners forced into short sales (selling the home for less than the amount owed on the mortgage) to avoid foreclosure. But the 2020 coronavirus recession isn’t likely to see as many short sales as 2008 because we have not seen the subprime mortgage lending practices in recent years that led to the 2008 Recession. Instead, we’re likely to see traditional sales that net a profit for the sellers. The issue in 2020 is the sudden jump in unemployment, which some economists speculate could reach 20–25% in the US.
While forced sales are always unfortunate, they are a fact of recessions. And empathetic brokers can help sellers make the best of a bad situation by helping to sell the home quickly and profitably. Smart tech tools such as PropStream’s Distressed Property Finder can help you identify homeowners who are behind on their mortgage payments so you can reach out to offer assistance.
3. Work With Banks to Sell REO Liabilities
When homeowners are unable to bring their mortgage payments current, and they’re unwilling or unable to sell the property, the bank may be forced to foreclose. At this point, the property becomes a “real estate owned” (REO) property. Banks are in the business of lending, not of property management. They typically have no interest in holding REO properties as assets. Instead, these properties are listed on the bank’s books as liabilities.
Asset managers are looking for efficient brokers who can sell these liabilities as quickly and smoothly as possible. And they may be willing to sell under market value in the interest of a quick and seamless sale. Not only are REOs a solid listing opportunity, but they’re also a great investment opportunity. You may even have an investor client in your sphere who could be the buyer!
Slow housing markets present a different set of challenges than strong housing markets do. But when you know how to find buyers and sellers in a slow housing market, your real estate brokerage is effectively recession-proof.