Tips From the Top
By knowing what challenges lie ahead, you can be better prepared to meet them. Read on for advice from savvy brokers and experts who know the business and have seen this market before.
Today’s market means a shift in planning for real estate sales associates and brokers. While markets around the state are still doing well compared to the down markets of the 1980s, homes are taking longer to sell than in recent years and there is more inventory from which to choose.
Sales associates and brokers have to roll up their sleeves and get back to basics.
Top real estate professionals who know the cyclical nature of the market know what to do about it. They are becoming “educators” of sorts, telling sellers about the new rules of the road when it comes to listing properties. They preach the value of staging homes; help sellers understand market dynamics and price homes at more affordable levels. Brokers also support these efforts by offering more sales training and support to the associates working out there on the front lines.
With several months of a stabilizing market behind you, the question now is whether the market normalization will continue this year and what challenges you will have to grapple with as you make your way through 2007. Florida Realtor® asked a handful of residential and commercial brokers, as well as several experts, to pull out their crystal balls and give us the answers. Here’s what they had to say: Getting Back to Basics
Helping 2,300 agents in 50 offices cope with the changing real estate market has become a round-the-clock job for Rei Mesa and his management team. As president and COO at Prudential Florida WCI Realty in Plantation, Mesa says brokers are “getting back to basics” by training new sales associates on the finer points of navigating the changing waters, while also working with existing associates who need help finding their way.
“We’re showing them how to do more open houses, price the properties appropriately and expose those properties using all of the e-commerce vehicles that are available,” says Mesa, who sees experienced sales associates needing equal training time during this period of flux. “We have to get those agents back into the habit of delivering exceptional customer service at all times, and that takes training.”
Mesa sees the ability to price homes so that they will sell as a cornerstone of that training. “Pricing will be key,” says Mesa, “as both new and experienced agents learn how to better guide sellers on how to price their homes at a level that the marketplace will bear.” On a Global Scale
With his finger on the pulse of the nation’s real estate market, Steve Murray, editor at REAL Trends Inc. in Denver, sees a challenging year ahead for many sales associates and brokers. He sees the shift from a seller’s to a buyer’s market as an obstacle, particularly for those who got into the field within the last 10 years and have never experienced a market stabilization or downturn.
“We’ve gone through a complete change in the market in a very short period of time,” says Murray. “Associates have to shift their focuses.”
Furthermore, Murray says, the fact that the Internet wasn’t so widely used during the last real estate downturn makes the situation even more challenging. “Buyers used to read about the downturn in the newspaper, but now they have immediate information at their fingertips on the Web,” he says. “They can price homes to the minute, on the dot, any time, anywhere, and they can look at listings and sales comps.”
In addition, the Internet makes the headlines about down markets and price depreciation even more threatening.
If that’s not enough proof of the way the Internet will challenge sales associates and brokers during the market shift, Murray says, buyers are also watching values and using sites like Zillow.com
to check pricing trends. Agents have never had to deal with that before.
What can you do about it? First, you can spread the word. Florida is a shining star for international buyers and those who want a second home. By targeting these buyers, you can keep your sales up. In addition, use home valuation sites yourself. By knowing pricing trends in the market, you can educate the seller and the buyer by offering your experienced take on what’s happening. Commercially Speaking
Ask Cynthia Shelton, director of investment sales for Colliers Arnold in Orlando, what she sees as the top challenges facing sales associates and brokers this year, and her answer comes quickly: high insurance and property tax rates. And, while the issues are prevalent on the residential side, they’re exacerbated on the commercial side, where building owners are being hit hard by fees.
“Insurance is just outrageous, if you can get it,” says Shelton. “One owner of several buildings in South Florida saw his insurance rates rise from $50,000 in 2005 to about $350,000 in 2006.”
Taxes aren’t any easier to grapple with. With assessed values on the rise, the tax bills continue to climb, making it difficult for commercial buyers to justify their purchases. “Some owners can pass those costs on to their business or residential tenants,” says Shelton, “but others just have to absorb it.”
A member of Gov. Bush’s Property Tax Committee, Shelton also sees high property taxes taking their toll on the commercial market in 2007. Not privy to the “Save Our Homes” caps that Florida residents have on homestead property, commercial owners have been hit hard by rising rates. “That challenge will definitely continue this year,” says Shelton. Effective Property Marketing
After years of working in a booming real estate market, sales associates are coming down to earth and learning how to operate in a more normal setting. The problem, says real estate expert John Tuccillo, president of John Tuccillo & Associates in Arlington, Va., is that many of the sales associates out in the field right now have never seen this type of market and don’t really know how to adjust to it.
“You can’t just list a property and watch it sell off the shelf in a few days,” says Tuccillo. “You actually have to work on marketing properties, attracting buyers and differentiating your properties from everything else that’s on the market.”
Blame the surplus of inventory for creating this challenge, says Tuccillo, who urges sales associates to find their properties’ best attributes and selling points, and to highlight them as a way to make them rise above the pack. He sees brokers and managers playing a key role in the adjustment process.
“Many brokers and managers have been in the business longer, and have seen real estate cycles before,” says Tuccillo. “They need to dust off the old tools that they used in the past, and help their associates understand how to use them and what needs to be done.” Homeowners’ Insurance Woes
Their stories grace the pages of nearly every newspaper across the state: disgruntled homeowners threatening to vacate the state if something isn’t done quickly about their skyrocketing homeowners’ insurance rates.
In the Panhandle town of Fort Walton Beach, Bob Hudgens, broker/owner of Century 21 Coastal Realty Services, says his 12 sales associates grapple with the issue on a daily basis when trying to match willing buyers with available homes.
“We’re losing deals,” Hudgens laments. “Either the price of insurance is too high (for owner-occupied homes) or completely unavailable (for investors). I’ve lost deals both ways.”
Hudgens sees the issue continuing to sideline deals well into 2007, and says sales associates are dealing with the issue by informing and educating buyers of the potential roadblock well in advance of making any offer. “Where the taxes and insurance portion of a monthly escrow used to be small (say, $75 based on a $700 monthly payment), it now comprises 30 percent or more,” says Hudgens. “To make sure our deals are solid, we have to reset expectations on what buyers put out on a monthly basis for housing.”
For more information on what Realtors are is doing to help solve the property insurance crunch, see December’s Florida Realtor, page 48, “Florida’s Insurance Crisis: Is There a Solution?” Managing Seller Expectations
There are two things that sellers don’t want to hear: “Your home is overpriced for the market,” and “We need to reduce the price of your home if you want to sell it.” Unfortunately, more and more sellers are hearing those words from their sales associates these days, thanks to stiff competition for buyers and unrealistic expectations of sellers.
“Sellers don’t want to hear that price is the only reason their home isn’t selling,” says Gloria Frazier, president of ERA American Realty of North West Florida in Shalimar. “They want to hear about better marketing, more open houses and other strategies that can make their homes stand out from the crowd.”
With five offices, Frazier says, persuading buyers that all the marketing in the world won’t help sell a home that’s overpriced has become a key discussion point for her 90 sales associates. “We’re walking a fine line between making sellers happy, and making them feel like we’re just using price as an excuse to fluff off on the job,” she says.
Expecting the challenges to continue in 2007, Frazier says sales associates are giving consumers as much data as possible, including the most current information on active listings that have yet to sell, sorted by square footage. “That gives sellers a visual on where they are in terms of the size of their homes compared to that of their competition,” says Frazier. “They can quickly see why their home is worth less than [that of] the guy down the street, who owns a larger home.”
From pricing woes to more marketing and an eye toward a resolution to property insurance problems, Florida’s real estate professionals can be well-equipped to meet today’s market head-on as long as they keep their eyes open, educate themselves, get back to basics and continue to work hard. Bridget McCrea is a Clearwater-based freelance writer.