How to Succeed in a Low Inventory Real Estate Market
Rachelle Anderson: [00:00:00] Leif you can take over. We were just slightly talking about what we can do in this market since inventory’s low.
Leif Strahan: So we’re definitely looking at some of that. And I do apologize to everyone about my, my tardiness. So I do. Had a couple different thoughts in terms of low inventory and so prospecting obviously is a part of what we should be doing in terms of making sure like is, is there an opportunity?
But a couple things that I wanted to reiterate and tress one, when you’re prospecting, are you prospecting as an agent trying to get a listing or are you prospecting as someone that already has a buyer that wants to make an offer on the house? And so I think in the past we’ve talked about buyer agency, so from my mind realize the power of buyer agency is that it allows the buyer to pay you a commission and you’re like, wait, I don’t, I don’t get it.
Why is that an advantage? Well, [00:01:00] remember if the buyer’s willing to pay your commission, that means you can look at any for sale by owner. You can literally knock on any door that you want to. Like, there’s so much more that you can do when the buyer is willing to guarantee your commission. Here’s the other is issue.
If the buyer’s willing to guarantee your commission, what’s the win for the buyer other than finding maybe, Hmm, property that didn’t exist before
So lemme ask you this, how many of you are in Multiple and Competings right now?
Quiet group. No one’s in multiple in Competings. So
Rachelle Anderson: I, I know that there are some I just, I know preferably in here, our microphone doesn’t work too well in the group setting, but the others that are on [00:02:00] the call, you guys can answer. We’d appreciate it.
Leif Strahan: Every offer is multiple and competing basically. So every offer is multiple and competing, and you guys can do the math.
If multiple in competing means we’re gonna go 10% over asking price. You know, at your guys’ price points, even at a very, very modest house, that’s gonna be another 50 to a hundred thousand if it’s 10% over asking. Correct. So if I can avoid a competitive bid situation, I’m gonna save them that 10% over asking price.
In other words, I’m just gonna save them 50 to a hundred thousand. So again, by finding that property that is off market, by doing the for sale by owner, by doing those things that consumer should be like, yeah, sign me up all day. Because anytime you can avoid a multiple and competing situation, that is definitely a win for all of your buyers.
So the pitch is relatively [00:03:00] straightforward in terms of. Hey, we’ve gone through this multiple competing. You saw that it’s gonna go for 10%, 5%, whatever the number is over asking. You know, if we can avoid that, is that something that would be interesting to you? In other words, if I can save you 50 to a hundred thousand, is that something that’s interesting?
Well, of course. Okay, so here’s what I want to propose. If you’re willing to guarantee my commission, we can look at other properties that aren’t even on the market just yet. And so by doing so, we’ll avoid multiple competings. What’s the last win if we do it? Well, I know we don’t have necessarily as much back and forth here, but what I’ll say the last win is, remember when buyer agency exists, your fiduciary exists to the buyer, which also means that if the seller wants to sell below market value, that’s also a win for the buyer cuz you’re not trying to take a listing, you’re just trying to execute a purchase and sale contract.
So if for whatever the reason the seller is willing to sell [00:04:00] below market value, you’ve got an automatic win for the buyer from that aspect as well. Okay, last but not least, if the buyer’s willing to guarantee your commission and you just got beat out, how many of you are door knocking with the exact same offer on the neighbor’s doors?
Hey. On 1 23 Smith Street. You know what I’m knocking on? 1 24 Smith Street and 1 22 Smith Street, right? I’m knocking on the neighbor’s doors and I’m saying, look, I almost had a neighbor here that was, you know, going to be your neighbor. They were willing to offer 1.7 on the house next door. I know your house is a little bit different, but would you be open to entertaining the same offer?
No. Okay. Do you know of anyone else in the neighborhood that might be open to it? Because quite frankly, they really love this street. Remember, you’re not trying to get a listing so much, it’s to find out whether somebody wants to [00:05:00] sell and you’re giving them basically a buyer that says, Hey, you know, they offered 1.7.
Are you open to entertaining that same offer? I’m not even trying to get a listing. I’m just asking would they be willing to sell? And if they go well, I’d be willing to sell, but not for 1.7. I’d sell for like 1.8, 1.9. Okay. Do you mind if I take a look around the house and do a little bit of photos and see whether you know that the house will bear that and hopefully maybe get my buyer in this afternoon?
So remember, take your rejected offers, make the most of it. But one of the ways you’re gonna make the most of it is by looking at is the buyer gonna be willing to guarantee? And there’s absolutely an advantage if the buyer is willing to guarantee your commission, and I’m not just talking cold calling and sending out postcards and everything else.
Okay, questions on this?
Rachelle Anderson: I think my, my question would be how do you have that conversation with the buyer [00:06:00] as far as guaranteeing your
Leif Strahan: commission? Yeah, I mean, it’s obviously a little easier to do once we’ve had a rejected offer, right. And we could see exactly how much it’s gone over asking price. But we can simply say like, look.
If we start to look this way, we go through almost anything that’s on the market. We’re gonna be 10% over asking price, which means you’re gonna pay an additional, you know, 50 to a hundred thousand dollars depending on where the strike point is, right? If we can save you that money, is that of interest to you?
And I think almost every buyer would be like, yeah, let’s how, how can we save that money? Well, we have to find houses that are not even on the market. And the way we’re gonna do that is. I’ve got, you know, some pocket listings I can call into database, I can send out postcards. I can do X, Y, and Z. But simply put, what I need to do that is I’m not gonna go after listings.
I’m gonna go after a home for you. Which means are you willing to guarantee my [00:07:00] commission? I’ll try to collect it from the seller, but I need to know, like I’m not having to go negotiate that with the seller. If somebody says they want to sell, I wanna let them know that I’ve got a buyer for their house.
And you know, you’ve already told me that you want to be in the 1.5 million range. You’ve already told me you want three bedrooms, two bath school district, like you’ve already told me X, Y, and Z. So let’s go find that house for you.
So again, look at the buyer agency contract. Look at the advantages, but again, the advantages are is it allows the buyer to pay your commission, your fiduciary switches to the buyer, . To the seller. And so you’ve got a clear, a clear value proposition of why it’s a win for the buyer.
Rachelle Anderson: And because They’re saving. Money on the purchase Possibly because a seller is willing to, I guess, come down. Is that what you’re saying? They’re, they’re gonna say
Leif Strahan: We’re just avoiding a [00:08:00] competitive, we’re avoiding a competitive bid situation. Right. Right.
Rachelle Anderson: And then that way they’re more apt to guarantee a condition because they’re saving money on the other end.
Leif Strahan: Yeah. Cuz they just saw, okay, so that house that was listed for 1 million went for 1.1. Well, I would prefer not to have to go to 1.1 every single time. I would prefer to keep it in a million instead by avoiding a competitive bid situation if they want to accept my million dollar offer. We’re good. We’re good because remember, you’re not going onto the house next door saying, Hey, the house next door went for 1.1, and my client offered one, and that’s why we got beat.
You’re going in and saying, Hey, it was listed for a million. We gave them an offer of a million. I think we were like second in line. You know? Would you be willing to consider the same offer of a million? Because let’s be honest, most times when, when that house goes on the market, most people will know what that price was in the market.
They might not necessarily know how much over asking [00:09:00] Price it win though, at that particular moment, right. So you’ve got an advantage to basically start playing out and start door knocking with that existing offer that you’ve already got in hand.
Rachelle Anderson: And as Robert Had suggested, doing those activities might even bring other, you know, clients your way just by default. Not that your, maybe your purpose is that you’re trying to find the home for your buyer, but other things come from it.
Leif Strahan: Yeah. So to Robert’s point, again, if you’re door knocking with the one rejected offer, would you entertain an offer of a million?
No. Okay. At what point would you entertain an offer? Okay, so for 3 million, I’ll let you know if I find somebody for three, you know, but do you know of anyone else in that? Listen to this.
So again, look at, you know, As you’re having those conversations, okay.
At what point would you be willing to take an offer? And of course, sometimes the [00:10:00] offers are unreasonable, like on a million dollars if I wanna sell for three. Okay. Good luck. Right. But do you know of anyone else in the neighborhood that might be open to it? Because neighbors talk, maybe not as often as they should, but they do still talk.
Oscar Mendoza: If I might add something, cuz I think that’s a great idea. Yes. Yeah. On on having a conversation with the buyers you know, paying our commission instead. You know, I I, I’ve always come from a train of thought of always creating the two options and, you know, letting the buyer decide which one is best for them because it, it kind of makes ’em feel that they’re in control at all times rather than saying, Hey, this is the only way.
This is gonna work. One of the approaches that I’ve tried also when we’re getting beat out on offers is I tell the buyer, listen, there’s two other ways of getting our offer accepted, increasing the chances. And one of ’em, you know, goes back to what you just discussed, which is them paying the buyer commission.
The second one is actually offering to cover escrow fees, title [00:11:00] fees county and city transfer tax for the seller. And basically doing anything that would net more money in, into the seller’s pocket. And I’ve created those two options. And sometimes they’ll go with the commission one option, and then sometimes they’ll go with the other one.
But at the end of the day, I, I would imagine that the goal is to outbeat the other offers by netting more, more money to the seller. Is, is that correct?
Leif Strahan: You’re doing a little, something a little different there. And what I wanna highlight is, what I know some teams are doing right now is, Let’s say the buyer is willing to guarantee your commission, right?
Well, sometimes I know what they’re doing with the listing agents is they’re just basically saying, look, listing agent, you keep a hundred percent of the commission. Like I’m already getting paid. Now if the listing agent wants to choose to try to pocket both sides, like that’s entirely up to them. And some listing agents will, some of the listing agents will say like, okay, you’re.
You’re, Mr. And Mrs. Seller, you’re able to save X percent because you know, we don’t have to pay [00:12:00] X percent out. So what you’re kind of talking about is more that secondary thought, which is any cost you can save to the buyer, clearly that that’s, or any cost you can save to the seller, clearly that’s a win.
But again, if you’ve already got your, your commission negotiated. I know sometimes that allows the listing agent to almost treat it like they’re double siding it. And some of them will do it. Some of them will pass that savings right back on over to their, to their client. So it really is kind of in the, the listing agent’s hands at that point, what they do with it.
But if your commission’s guaranteed from the buyer, you’ve got a lot more of an opportunity to see that their offers accepted, cuz remember, If you can’t avoid a be a competitive bid situation, then at the very least you wanna try to make sure your offer’s accepted. Agreed, yeah. Correct. So, again, selling costs, commissions, whatever, like mm-hmm.
The more that you can sweeten up that deal, the better it’s gonna be. Yeah,
Oscar Mendoza: I’ve already had a situation where [00:13:00] I, you know, yeah, you’re right about you know, the listing agent has, unfortunately, unfortunately, a lot more control. And if they, and, and if they’re gonna double end the commission, yeah. I mean, they’re gonna push that offer hard all day long.
Leif Strahan: They’re definitely gonna push it harder than what they might otherwise. And let’s face it, some listing agents will just say, Hey, this is gonna be, you know, an additional cost savings for you. But that’s a listing agent by listing agent. Let’s just say opportunity. So remember again, the buyer guaranteeing your commission opens up a lot more, a lot more opportunity than what it seems like on the surface.
So again, buyer agency isn’t to try to make sure that it’s cemented in the relationship to you. It’s more of how does it benefit the buyer? Because buyer agency, at the end of the day, if it doesn’t benefit the buyer, why are you doing it?
All right. I know we talked about prospecting [00:14:00] before I came onto the call. Absolutely. Be prospecting. Absolutely. Make it a regular part of your day. Absolutely. If you’re not door knocking, you’re not, you know, working expireds, like to whatever degree that there are, any of those going back through your database, looking at old, like, let’s be honest, it is a good time to sell.
It’s just not a great time to buy. So obviously the reason why a lot of people don’t wanna sell is cuz if they’re at a 3% or less mortgage. Nope. That makes it pretty attractive for them to stay in their home rather than try to sell. Because if they try to sell and upgrade their house, so to speak, they’re looking at a much higher percentage of interest rate into their new loan.
Agreed. So my next question to all of you is, how many of you can go through and say, okay. If we need to save 300 basis points on the loan, what does that really look like in actual financial terms? In other words, if I need to help them be willing to sell [00:15:00] by trying to get them another 3% mortgage, 2.5% mortgage, what’s the actual financial difference on that?
What you may find is it might only be, you know, 20 or $30,000 to buy through some of those interest rate points to get them that 3%, 2.5% mortgage again, and help that person see that they could still sell relatively easily.
So my, my ask of all of you this week, Go find out and find out, like what would it take upfront to get that 3% mortgage again that so many people don’t wanna lose. Because if you can do that, and you can say, look, not only can you get a great asking, right, because Li inventory’s so limited, but I think we can also make sure that you’re getting a 3%, you know, mortgage when you choose to buy [00:16:00] again.
And here’s how. Questions on that?
Okay, we’ll just go with it then. I know we’re kinda coming up onto time. Again, I do apologize for my, for my tardiness. I will be back down into your office before too, too long, so I am definitely looking forward to seeing all of you again very soon. Have a great rest of your day, everybody.
Rachelle Anderson: We appreciate it. Thank you. Bye-Bye guys.