How can real estate professionals help buyers in a hot seller’s market?
According to US real estate company Redfin, COVID trends and low mortgage rates led to a 50% drop in the number of homes for sale, despite high demand. This led to home prices skyrocketing:
Many buyers are left frustrated having to participate in bidding wars, and these days even have to compete with iBuyers. What are you doing as a real estate professional to help your clients in a hot seller’s market?
Stand out and offer something of value to the seller
Redfin’s CEO Glenn Kelman recently gave interesting insights on how they approach this in a hot US seller’s market where good homes easily sell over a weekend (71% of homes in February sold in bidding wars). To make their buyers stand out, Redfin uses a reverse-offer deadline which includes a bonus if the offer is accepted within a given timeframe:
Cash is king
A cash offer will always be more attractive to sellers, as there is the opportunity to close the deal quicker than a home-loan-backed offer. It is the perfect way to win a bidding war.
Companies like Knock and Ribbon empower buyers with cash-backed offers and puts them in front of the line in bidding wards. According to them, buyers are 4 times more likely to win their dream home. Expect to see more fintech companies that offer cash-backed buyer features in the future with a competitive market.
Pre-approved finance is not optional
It has never been more critical to preapprove buyers ASAP, even in a buyers market. It speeds up the sales process and saves everyone time. I’m perplexed that many real estate professionals in South Africa oversee this critical step and attend to it only when offers are written. It puts their buyers at the back of the queue where multiple offers are expected on a home. It also delays the home sale (in South Africa, most agents act as both buyer and seller’s agent). Taking non-qualified buyers to viewings is one of the biggest disservices to sellers.
In a hot seller’s market, you don’t want to be the agent making an offer subject to the buyer getting finance.
Quicker offers
In a hot seller’s market, you also need to ensure you have the right tech in place to connect buyers with new listings asap, and then seamlessly assist them from there to conduct viewings and make offers. By the time other buyers find this home, it may already be under contract:
I love how data-focused the new generation of real estate companies are, and how tech is used to not only empower agents, but their clients.
To summarise:
- Evaluate time-bound offers that includes a bonus.
- Is there a way to assist buyers with cash-backed offers?
- Pre-qualify buyers as a default first step.
- Streamline and speed up new listing notifications to buyers, respond quicker to leads and push to schedule viewings asap.
Finally, it is always good to work with a trusted real estate professional. They will be able to motivate you as the perfect buyer and unblock contingencies. Small things like aligning with the seller’s ideal occupation date can make make or break a deal.
BTW if you see the value of streamlined platforms for your real estate business, stay in touch with what my team does at Entegral.
