As the U.S. real estate market pushes new heights, some may want to think about avoiding self-sabotaging moves that could hurt their own properties.
Forecasts for the year ahead mainly call for positive growth. That’s great news for real estate investors, agents, homebuyers, and existing owners. However, with analysts and locals carefully scrutinizing the market for signs of being over heated, it’s worth double checking your moves to ensure you aren’t giving the pessimists any excuses. So how can Realtors, investors, landlords, and sellers, help avoid freaking out the market, and sabotaging their own incomes and assets in the process?
Long Listings: Once real estate listings have been on the market for more than six months, they begin to have a negative impact, part of which is simply public perception. When consumers see homes selling in hours, they often act with a sense of urgency. When they see homes sitting on the market for long periods of time, however, they lose that sense of urgency. There is no rush. It can also breed doubt over the desirability of neighborhoods, properties, buildings, and the market in general. Then there is the hard data issue. Days on market (DOM) is one of the main metrics used to sum up markets by analysts. Long listing times suggest a weak market. That also comes into play in appraisals. So avoid extended listing times.
Expired Listings: If listings don’t sell, they expire. That’s a significant tell that properties are overpriced, or that buyers aren’t active. It also attracts lots of low ball offers, and disappoints sellers. To an extent, expired listings are equally as damaging to a local area as listings that have been sitting dormant for an extended period of time.
Overpriced Lisitngs: Testing the market, pushing for the maximum you can get, and elevating the value of other real estate holdings by listing high isn’t always a bad thing. However, it can certainly wind up being counterproductive. If you list too high,you can run into the previous issues we discussed: expired and extended listings. It can also discourage some buyers and investors from engaging in the market. If the numbers just don’t seem to make sense, some will give up and look elsewhere, or buckle down where they already are. This is something sellers and agents should question when listing properties.
MLS Flipping: Despite the arguments that you can’t do it, real estate investors are clearly flipping houses like crazy on the MLS. Some are buying from the MLS, and are relisting immediately for $50,000 markups with little or no improvements made. That’s great for those that are getting it. It’s insanely easy and fast money. However, consumers are smarter, and armed with more information than ever. All they have to do is to click on the property history tab on Realtor.com, and they can see previous transactions and listing activity. They can see if a property failed to sell for a lower price in the past, and if it was just purchased for far less just two weeks ago. Some may not care. Some may be motivated by other factors, and will act anyway.
Over the Top Rents: Much of the same applies to rent, or at least what landlords are charging their tenants. Pushing the limits with wild rental asking prices can be worth a shot in some cases, but it too can be counterproductive. Unfortunately, few landlords seem to really be doing their due diligence and market research when pricing rentals. They may glance at what others are asking in rent, or just take their Realtor or previous seller’s word for it. However, too many fail to look beyond that.
The most likely outcome is that an overly priced rental is going to sit vacant. That brings a variety of additional risks, including a negative perception of the market. High vacancy rates suggest lack of demand, and lack of profitability on investment properties. That may not be the case, but it can impact the appeal for future buyers.
Answer the Phone: One of the most significant challenges for real estate buyers today is just getting a Realtor or seller to answer them. All too often, phone calls and emails just go unanswered. This is even true of very highly qualified, eager buyers, and when responding to paid advertising. Maybe there are excuses for this, but sellers and Realtors don’t seem to get how counterproductive it can be to ignore clients. They are burning out buyers. Buyers are just getting tired of trying, and many are giving up. Even if you have a surplus of buyers, you’ll be wishing you had those extra leads and referral sources down the road. If you aren’t going to answer, don’t advertise. If you advertise, find a way to answer every lead.
