Let’s get real – and radical – about changing the real estate market. Rather than wringing our hands about first time buyers, bankers and credit, why don’t we find the clients of the future, who have something very valuable: Cash.
They are out there – just at the end of our fingertips: Buyers emotionally ready to move and financially able to do so. They come in every shape and size. Baby Boomers whose kids are heading to college on scholarships and government loan, leaving Mommy and Daddy’s equity/savings available for a bargain priced vacation home. Pent-up move up buyers, entering the prime earning years of their careers. And then there’s the rest of the world: Not everyone is experiencing a recession, and the U.S. dollar is at record weakness. For those people still making money around the world, putting it in the safest “vault” means United States property.
NAR recently reported that nearly 7% of the U.S. residential housing market was purchased by foreign buyers, largely from Canada, Mexico, the United Kingdom and China, all of which have worse property laws than even the highest local tax zones in America.
The Associated Press reports that, “The Viceroy, a swanky condominium complex in downtown Miami, gives the impression that the United States is in another real estate boom.” And it’s not just swanky destinations like Miami that are attracting foreign buyers. According to the AP:
“Miami is hardly the only hot spot for buyers from outside the United States. Real estate brokers say they’ve seen a surge in Washington, New York, Las Vegas, Los Angeles and San Francisco. In Seattle, Asians are buying property sight unseen, says Joe Brazen of Brazen Sotheby’s International. In New York, 25 percent of buyers at the Armani-designed 20 Pine building, near the World Trade Center site, are from overseas.
Back home, there are the builders. Don’t count them out yet! Builders, by definition, are buyers who understand the classic prosperity rules: buy low, sell high. Along with contractors who rehab, rent and flip homes, a shadowy secondary market is happening in real estate. As Businessweek recently pointed out,
The 12 largest homebuilders by market value added 16,631 lots to their control over their two most recent quarters, according to data compiled by Bloomberg.
Many of them are picking up stalled development projects that froze along with credit markets a couple of years ago. Just more proof that there’s plenty of buying, because some people realize this recession will eventually end.
The challenge is that most REALTORS aren’t prepared to work with any of these kinds of buyers. Their “traditional” approach to residential sales might put retiring Boomers within their sphere of postcard influence, but newspaper ads and magnets aren’t going to reach foreign investors, builders and developers. It’s going to require serious rethinking on the part of brokers and agents to tap into this secondary market.
The pieces of the opportunity puzzle are all laid on the table. Bargain inventory, great property laws, cash-ready buyers. Isn’t about time REALTORS realized they’ve wasted two years trying to jam first-time buyers into the inventory and finance grinder? Will they be able to stop working with senseless sellers who won’t or can’t price to market; spending weekends driving buyers around to see 50 homes; and dealing with banks who won’t even return calls regarding full-priced offers to purchase foreclosure inventory?
It’s time to put the market pieces together in a new way; to form a new picture of the future of real estate. To make markets using the inventory and buyers that are on hand, not waiting for some “return” to the markets of yesteryear. Some agents may not like the shape of the new market, because the next generation of buyers and sellers might not look anything like the “newly married couple” or the “retiring boomers” they spent a decade preparing for. Yet it’s clear there’s plenty of buying going on in the shadows of the traditional brokerage model. With all of the tools at their disposal – video marketing, social media, inventory management systems and local market knowledge – it’s time today’s REALTORS started working with tomorrow’s buyers who are not only within their reach….
…They actually have some cash.