With record-low inventory nationwide, agents seem to be hearing the same thing day in and day out: “I’d move, but where would I go?”
For most agents, that’s the end of the conversation. It simultaneously ends the possibility of taking a new listing and taking on a buyer. After all, inventory is at all-time lows nationwide. According to Altos Research, there are just 414,278 active listings. We are still at least a million listings shy of being a balanced market.
When would-be sellers don’t know their next move, don’t just answer them with “Yeah, there’s really nothing on the market.”
You can’t end the conversation there and expect to do any business this year!
Market forces are working against you. Rates are higher — though landing at 6.55% at the end of last week is a step in the right direction — and inventory is scarce. Add some inflation, the specter of a possible financial crisis and overall uncertainty and you now have a transitioning market.
Agents have a choice to make. You can either wait for the market to bounce back or you can create your own opportunities by being more proactive. Hope for the best, but plan for the worst! Assume you’re not going to wake up to 3.5% interest rates and double the inventory.
Back to our conversation with that would-be seller client who won’t list with you because they don’t want to become homeless. Here are 10 solutions for would-be sellers that go beyond waiting and watching for magic inventory to arise.
Consider building a home instead of chasing after the scarce resale inventory.
There are several advantages to this option. First, many builders are buying down interest rates using their in-house financing. The buyer can lock in a better rate this way. Next, the house is new. No rehab for them and no inspection woes for you. Your client can get their home on the market a couple of months prior to completion and not have to move twice. Finally, when your client builds, they aren’t having to compete in a bidding war.
Consider buying first, closing and then listing the previous home.
Don’t assume your buyer and seller prospects won’t or can’t utilize this option. They may have a downpayment saved that isn’t their home equity. They might use a bridge loan to borrow their equity, close on the next home and then sell the old one. You don’t know if you don’t ask. The advantage is that your client can make a non-contingent offer, secure their next home and deal with their old house later. Make sure you know lenders who offer bridge loans and understand how to explain this option.
Consider selling first, renting for a while and taking the time to look for the right home.
The advantage here is the seller has cashed out their equity and is ready to pounce on the right home, but without the pressure of organizing closing and possession dates. Who are your go-to leasing agents? Consider traditional rentals and short-term vacation rentals that may consider a lease for your sellers. Many properties have some great amenities that could work for a short to longer-term lease while you help your client find the right home to buy.
Consider getting the seller’s home on the market now, but make the acceptance of an offer, ‘contingent on seller finding suitable housing.’
The buyer will probably want a specific time frame, but you can usually get 90 to 120 days to secure the next home. Many buyers in today’s market are just anxious to find the right home and will be flexible with the seller’s situation. It’s still a seller’s market. The advantage to your client is they won’t have to move twice and you’ve negotiated for them enough time to look for the next place.
Convert the current property into a rental unit.
You can handle the lease yourself or refer it to your favorite leasing agent. The home remains an asset for your client and they can keep their low-interest rate mortgage. Don’t assume that this isn’t an option. You have to ask! Remember that many Americans currently have record-high credit scores. They may be more comfortable taking this option than you think. In some markets, keeping a home and turning it into a short-term rental can be very profitable. It might be the best option for your client.
Consider selling the home first, but leasing it back to the buyer for a set amount of time, allowing your client to find their next home.
The buyer is happy because they secured the house, and your seller is happy because they have both time and money coming in to facilitate their move to the next place.
Consider this little-known but much-utilized possibility: buying an RV, a houseboat or a sailboat.
There are dozens of examples of sellers who cashed out their homes and simply bought something like this to travel for a while. You might be surprised that it’s not just baby boomers or retirees who are utilizing this option. Sellers could even cash out and rent a series of short-term rentals in different areas of the country or the world, trying out new possibilities before they decide where to land.
Consider finding your would-be seller an off-market home to purchase where that seller has flexibility.
The advantages here are that you are in complete control of both sides of the transaction, and you may pick up yet another client when the off-market seller also needs to buy.
Some of your seller prospects may be ready to move into an assisted living care facility.
Many of the homes that are coming onto the market right now are located in 55+ communities. Baby boomers who are downsizing, empty-nesters and the like may be ready for a new living situation.
Moving in with relatives.
It may not be a solution for everyone, but it is certainly an option. Whether that’s moving in with parents or kids or cousins somewhere else, it can be a short-term solution.
Tim and Julie Harris host the nation’s #1 podcast for real estate professionals. https://
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