In today’s San Diego real estate market, low home inventory create many difficulties for home buyers in terms of choice and price. A recent report by Trulia states that U.S. home inventories have hit a record low since the housing market began the turnaround in 2012.
So how can home buyers find their dream home in such a competitive market with low home inventory? Home buyers can sign-up with many different property search services provided by real estate agents or through their own efforts by using sites such as Zillow. This amounts to a “sit and wait” approach which leads to multiple buyers all rushing to get the same home forcing bidding wars. Worst of all, home buyers are forced to settle on a home they are not really in love with, but feel compelled to buy since there is little available. If the home buyer doesn’t have to purchase quickly, there is another way that will allow the home buyer to:
- Find the home they really want,
- Avoid bidding wars with other buyers,
- Save money for the sellers, and
- Provide flexibility in transitioning to your new home.
My Approach
I have developed a very successful approach that identifies homes prior to coming on the market thereby eliminating other buyers. My approach is a direct letter campaign targeting a specific list of homes or an area of homes followed by contacting the sellers either by phone or by knocking on their front door. Sounds simple, but it’s the execution and persistence of the campaign that matters.
First step: Before one letter is written, it is important to develop a story about the buyer that identifies who they are, why they are interested in the particular home or area, and their financial qualifications (see your mortgage lender to obtain a per-qualification letter) to purchase. Many sellers receive marketing letters from real estate agents stating they have a nameless buyer that would be interested in buying their home. These letters are nothing more than shameless marketing pieces about the real estate agents to get their foot in the door. To be effective, the initial letter must be specifically about the buyer.
Second step: The home buyer should identify the area they are in love with and identify any particular home that may interest them. This can be accomplished by driving around neighborhoods and writing down addresses of homes. To be effective, the list should be at least 80 homes. Of course the buyer should understand from their lender how much a home they can afford. I provide a basic home pricing analysis for the area to the buyer to guide them in their search.
Third step: Once the buyer’s story is completed, a very brief and “to the point” letter to the homeowner can be created. My experience and training in writing sales letters to homeowners is required here. Typically, the response from sellers is 1 to 3 homes from a list of 80 homes on the first mailing. A second and third mailing maybe required over the following month which will flush out more sellers by showing my persistence and sincerity.
Fourth Step: Right after the first mailing, I will canvass the area or specifically identified homes and knock on their doors. This face to face approach is the most effective aspect of searching for a home. You learn the “word on the street” on what’s happening in the neighborhood regarding who might be interested in selling and identify the seller’s true motivations in selling their home.
Fifth step: Once a seller is identified, a meeting can be establish to view the home. Most sellers who respond do so because they didn’t want to go to hassle of preparing the home for market or didn’t really know where to start. I always provide the homeowner a complete market analysis of the most recent comparable sales. It surprising how reasonable most sellers are in coming to a sales price when presented with this information.
One of the other advantages of approaching sellers, they typically do not have a real estate agent representing them which allows me to reduce the total commission since there would be only one agent in the transaction. This reduces the seller’s costs bringing more to their bottom-line net proceeds. Also another advantage is the flexibility afforded to the seller and buyer in the timing of the final sale. A buyer may have to sell their home and do not have worry about a contingent offer since the seller will need time to move out. Obviously, this approach is not for buyers looking for a quick close.
If you would like to talk more about this approach or have any questions please give me a call at (858) 342-6810 or contact me via my website at “Ask Broker Mark.”
