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After a year of über-competitive bidding wars and record-breaking home price growth, the market is finally slowing down and balancing the power dynamic between buyers and sellers. So how can agents and brokers navigate a shifting market and the ensuing challenges with inventory, pricing and negotiation?
Star real estate agent Amie Quirarte and leading real estate broker-owners Jemila Winsey and Anthony Lamacchia noted the current market is simply a return to a more normal pattern, complete with seasonal slowdowns and a greater opportunity for buyers to negotiate on price.
“I don’t believe there’s a shift,” Lamacchia, broker-owner and CEO of Lamacchia Companies, told the Connect Now crowd on Tuesday. “What’s happening here is a typical seasonal adjustment that we see every single year.”
“The only reason that it seems like more people are surprised is it got so extreme in the winter, and Amie when you use the word frenzy, that’s what happened,” he added.
Lamacchia said the market conditions of the past year, which were influenced by record-low interest rates, the shift to remote working, and the worsening imbalance between supply and demand, have lulled some listing agents and sellers into the comfort of garnering multiple-bid situations without much work.
“You had sellers that thought they were king of the hill, and you had listing agents who thought literally ‘I’m just amazing, everything I touch turns to sold. I’m the greatest realtor in the history of the world,’” he said. “I was watching this story all winter and saying, ‘Wow, this is really going to be interesting when we get to the point that sellers start to get humbled.’”
As the market levels out, Winsey, co-owner of RE/MAX Legacy Living and RE/MAX 1st Class in Texas, said the best thing agents and brokers can do is rely on up-to-date home sales and pricing data to help buyers and sellers make smart decisions.
“You’ve got to go back to the basics,” she said. “The basics [are] you need to know your data. A good student of this game studies the information on a regular basis and it should be part of what you do.”
Winsey said she hosts monthly meetings with her agents that explain market trends in terms of inventory, days on market, pending sales, existing sales, new-home sales, median sales prices and the like. She also breaks down those trends for specific ZIP codes, so agents can prepare sellers for a shift to a more normal sellers’ market.
“The numbers don’t lie. It’s showing [sellers] that [market] information and so you can logically explain it to them and be able to arrive at the right [listing price],” she said. “I don’t care what market we’re in — if [a home] is overpriced, it’s not gonna sell. It also gives buyers the permission to lowball you.”
Even after presenting the data, Winsey and Lamacchia said some sellers may be dead-set on listing their home four to five figures (even six figures on the luxury end) above a reasonable price. In that situation, Lamacchia said listing agents must make an important decision: Do what the seller is asking or walk away.
“It depends. If it’s a $10 million listing, and they want to go out and ask for $11 [million] that would be 10 percent higher,” he explained. “I would say take [the listing]. This is still a strong seller’s market, but let’s not lose sight of the fact that we were in a frenzied, extremely off-the-wall seller market before.”
However, if a seller is wanting to list their home 20 to 30 percent above their home’s value, Lamacchia urges agents to consider walking away depending on the seller’s ultimate goal. “Are they in a situation where they have to sell or do they want to be a seller? That should play into how strict or not that you are with taking that listing,” he said.
Winsey agreed with Lamacchia, saying she shot down listings where sellers wanted to list 10 to 15 percent above a proper, data-driven asking price. “Anything over 15 percent I would not take it. That was just my personal policy, my business policy,” she explained.
“But [the threshold] really does vary,” she added. “I would say set a threshold for yourself as an agent when you’re going to these meetings because it could be win-win or it could be lose-lose.”
Although much of the conversation about a shifting market has focused on tempering seller expectations, both brokers said buyers need some help too. “Here’s the thing: Buyers right now are pretty delusional,” Winsey said in relation to the idea they can “wait out” the market.
“If you’re a buyer in this market, and you need to purchase and you’re waiting the market out, what I usually say is, ‘Yes, prices may eventually flatline but it doesn’t mean the prices are going to come down. They’re going to flatline at the top,’” she added. “If you need to buy, you need to jump in so we can fight and get the best deal for you.”
In addition to navigating client expectations and price negotiations, Winsey said agents need to diversify their income sources, “get bullish” on adopting new technology and revisit their financial planning.
“A lot of agents have been kind of riding high on the fact that we’ve been getting a lot of these transactions in, and so really the conversation should be around the getting ready for the norm,” she said.