Toronto has a problem. For the past several months, or longer, there has been a shortage of freehold listings in the first-time and move-up markets. You will get different answers depending on who you talk to, but the main culprits include; low-interest rates, the Land Transfer Tax, tighter government regulations and higher consumer debt. The real answer is probably E, all of the above. Unfortunately for buyers the old saying rules…Desperate times call for desperate measures.
Recently one of our agents sold a condo for a young couple anxious to get into the housing market. Their goal was simple; parley their extraordinary talent for decorating and renovating. They did it to their condo and now wanted to do it with a house. Start small and slowly increase their net worth the old-fashioned way…buy a home with good bones, renovate and sell, then buy something bigger and do it all over again. It has been done successfully by many talented individuals over the years. But here is the problem. The couple in question have been watching the market for some time. They have heard the countless stories of wild bidding wars and are now convinced that the only way to win is by working with the listing agent. Their thought is that either they will get it at a lower price or at the very least get the inside advantage at offer night. The example given above should highlight a number of key concerns for both buyers and agents.
First lets look at the process from the buyer’s point of view. You go into an open house and see the home of your dreams. Well, lets clarify… the home of a lot of people’s dreams. So you ask the listing agent to represent you in purchasing the home. Now, aside from the obvious pitfall of asking them to represent both sides of a negotiation, you are signing a buyer representation agreement with the selling agent. It is important to understand what this means, otherwise you could find yourself in a situation where you owe two commissions. More to point however is that jumping from agent to agent will do you more harm than good. The simple fact is that you are hiring an agent to walk you through the process, negotiate on your behalf and in your best interests, keep confidential facts about your motivation to themselves, review competitive properties and help you determine an offering price, arrange and oversee things like home inspections and appraisal visits, and hook you up with contractors or movers and finally, provide a great deal of follow-up service. All these things are tough to do when your agent is also representing the seller especially when there are many people competing for the same home.
There are some basic mechanics about offer night that most buyers don’t know about either. First, if the selling agent is representing you, he must tell other buyer’s agents. He must also disclose if he is lowering commission. The point of this disclosure is to level the playing field for all buyers. That being said, some companies take great pains to ensure a fair and equitable process, so contracting the selling agent just doesn’t make sense if your motivation is to save money.
On the surface, contacting a listing agent seems like a no-brainer, but the reality is that a trusting relationship is the key to a successful home purchase in our competitive market.
Last year I had the opportunity to attend the National Association of Realtors convention in Orlando. Now I don’t know if this has ever happened to you but my experience is that when I attend the same conference the following year, I am always let down. Sometimes you get the same boring old speakers, sometimes the organization falls flat or maybe the energy just isn’t there. Well I did’t get that impression this year. The 2013 NAR convention in San Francisco was a stand out. To read the full report on NAR 2012 you can read my blog about it here.
So what was so good about this year’s event? Where last Year’s NAR was all about finding new ways to connect and engage with consumers, this year the buzz word was predictive marketing. It was about suspending your belief in the way we are used to working and believe in the science of real estate.
What is predictive marketing anyway? Consider this; We send out real estate flyers to a neighbourhood, often at great expense. What if technology could tell you the names and addresses of the three people in the neighbourhood that are planning to move this year. Take a look at this video on SMART TARGETING. So you are probably thinking…Yes, I want this now! Well don’t hold your breath. Privacy issues may prevent smart targeting in Canada but the technology exists already. In the U.S. data sites like Realtor.com, Zillow and Trulia have advanced metrics on who is looking at properties. Mr. Jones, from 123 Main St. looked at a house 6 months ago. Now he is looking at several houses a day. That has to mean something. Since these sites are for profit they can sell that data to the highest bidder. Not as easy in Canada but can you think of metrics that exist now, in our market, that could help you predict who is going to sell in the next few weeks or months? I suppose that is the challenge we face.
The idea behind predictive marketing has been around for a long time. You just need to look at Netflix for a perfect example. Do you ever see that message?….people who rented this movie also watched… OR we think you may also like this….
How about home depot? They see that you bought deck stain. Humm, that must mean that you are finishing off that deck…so they make available a gift certificate for a BBQ. But perhaps the best example has to be Target’s Customer Tracking Technology. Based on the products that a high school age girl was looking at, Target sent her coupons for maternity clothing and nursery furniture. The girl’s dad was furious at the store manager but as it turned out, the girl was pregnant, and Target was the first to know.
So now that you know this technology is out there, how can you make it work for you? Google analytics can get you part of the way there. Any other ideas?