One of the many challenges that agents face is when the housing stock drops low. It is a situation that makes buying a home increasingly difficult and is rampant in some areas. So, how do agents navigate a low inventory market?
Low Inventory Explained:
Characteristics of a low inventory market:
- There are a few homes available in the market.
- Agents have few sellers and buyers to represent.
- Homebuyers struggle to find a home.
- Fewer owners list their houses for sale.
- Lack of house options.
Low Inventory: The Early Signs Realtors Must Watch
#1: When new home construction slows down.
The lack of new and "For Sale" houses is the first to charge for low real estate stocks. Moreover, some building companies pull out of the contract. As a result, housing construction gets delayed.
Large changes in the market or job industries also impact inventory with labor shortages and supply issues.
#2: When home prices increase, and owners choose not to move out.
Here's the thing, the cycle of homeownership should move. That is to say, some owners should be preparing to sell their property already and move to another house. However, when they see that a larger home is expensive, they will instead opt not to move and this also contributes to a low inventory.
When home prices increase, it can stop homeowners from moving out and selling their homes. As a result, mid-level buyers can't afford to buy a larger house.
Similarly, some homeowners prefer to focus on home improvement projects because it's more budget-friendly.
#3: When investors start to take interest.
There are a few instances when investors see a crash in the real estate market and buy the property. Thus, they turn the property into rental homes. And just like that, the property is being used for money cash flow.
When renting is more popular - or more of an option - this is a sign to agents that inventory is low.
How Realtors Can Navigate A Low Inventory Market
During a low inventory real estate market, realtors should know smart ways to succeed in such conditions. Agents can consider these tips:
Work with past clients - always choose to work with familiar clients, especially those staying in their homes for at least two years. This is because they might be considering moving. So, there is a chance that they'd want to sell their home.
FSBO benefits - realtors can try to reach out to homeowners that sell on their own. So, it would be easier to motivate them to list their property in the market. In addition, since they already have the initial plan to sell their property, the transaction would come out seamless - and saves time!
Upgrade and market- make sure to update the real estate website and use technology. The secret is to use new marketing strategies in a challenging state. Hence, the key to navigating a low inventory market is to create a buzz.
Representing a buyer in a low inventory market:
Agents have a fair share of challenges when they need to represent a buyer. But don't worry because listed below are some tips that will help:
- Always be honest with the situation of the market. Keep in mind that buyers also need to be ready to move forward quickly. Not only that, being honest will help buyers decide if they want to make an offer.
- Make sure that the buyer is pre-approved.
- Be patient when negotiating. As a realtor, ensure that the buyer is selecting a house worthy of their money.
The Bottom Line
It's no surprise that real estate stocks can go low. Sure, there are plenty of causes related to low inventory. However, it is essential to remember that factors like economy and population also affect the real estate market.
This kind of condition challenges agents to bring out their expertise in the field of real estate. With knowledge and patience however, agents can more easily navigate a low inventory.
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