I was having a conversation yesterday about the past few years in real estate, and what a roller coaster it’s been. Over the past 4 years, anyone who has been in the real estate industry has had to adapt, evolve, and grow in order to keep up with the onslaught of changes in the real estate landscape. Many of those unable to keep up with the changes have since exited.
In case you missed it, here is a quick synopsis of what’s happened since 2020:
2020 - COVID shut down the real estate industry in Philadelphia for months
2021 - an insanely busy & inflated market with multiple offers on almost every property
2022 - interest rates nearly tripled in the span of 8 months
2023 - volume of property sold in Philadelphia dropped about 30% YOY
2024 - volume of property sold in Philadelphia dropped another 5-10% YOY & there was a NAR Lawsuit that impacted the way that real estate agents transact business
It has not been a 4 year stretch for the faint of heart by any means, and I could not be more grateful for the amount of experience that I’ve gained from waking up every day and having to solve new problems, attack new opportunities, and strengthen our systems to be able to stay in business to win for myself and for my clients.
Since 2020, I’ve had the privilege of being involved with over 150 sales, with many being new construction properties in the city of Philadelphia, and the new market we are in requires a much different approach for selling new construction than it did in 2021 when properties were flying off of the shelves for record prices.
There are a few things that we’ve been doing to try and combat the low activity we are seeing in the current market.
Buyer Specific Offerings
When buyers come through our properties, we are trying to understand what is truly meaningful to them in their search, and where we can add value to get a deal done.
Sometimes, a buyer doesn’t like certain finishes in the home. Are there things we can swap out to get them to transact?
Sometimes they are interest rate sensitive. Can we buy down their rate to get them to move forward?
Sometimes they have limited funds for closing & downpayment. Can we offer them a closing cost credit or cover their transfer taxes to get them to engage?
By understanding the feedback on the property and what it means, we can quickly make offerings to buyers that are specific to their needs to try and change their outcome and create a win-win for the buyer and seller.
Broker Engagement
With properties that aren’t seeing a ton of activity or showings, we try to focus on engaging the brokers who we know are transacting in the submarket. This is not a market where you can simply list a property on MLS and hope that interested buyers raise their hands.
We look for agents who are doing showings on similar properties, who are showing up in our reverse prospecting search, and who have recently transacted on similar properties in the same neighborhood or zip code.
By making sure that these agents are aware of our listings, the incentives we are offering, the value in the product, and understanding their buyers needs, we can make sure that our projects are getting maximum exposure.
Differentiating Your Product
When inventory rises, and you’re still trying to achieve maximum outsales, it’s important to think early on about how you can differentiate your product from the competition in the marketplace. I’ve engaged with hundreds of buyers over the past few years, and there is a sentiment regarding new construction that “it all looks the same” and that many buyers are looking for something with “more character”.
The product that I see winning in this market and gaining good traction and exposure, is priced correctly, and also has finishes and functions that go above and beyond your standard cookie cutter new construction home. This is obviously price point dependent, but it’s important to take thoughtful design into consideration through every step of the development process, from floorplans to finishes.
Right now, buyers have the luxury of taking their time and being selective, so it’s important to be able to offer them something that they don’t see every day, which helps to create urgency for them to transact.
Consistent Follow Up
Right now, I am seeing a longer sales cycle for buyers than I have seen in my entire career. There are some buyers who come and tour our listings, who don’t decide to put pen to paper and transact for 3-4 months after the first time we engage them. Following up and staying in front of these buyers and their agents, and getting creative during the follow up process to create enticing specific offerings for those buyers, is more important than ever.
These are just some of the thoughts that I’ve come up with from analyzing what I’ve seen happening over the past 18 months, where buyer activity is lower than I’ve seen in my career since 2017.
This market isn’t easy to navigate, but there are definitely ways to make sure that you are putting your best foot forward each day to give your development project the best possible chance of selling.
If there are things that you are seeing working in the current environment, would love to hear about them so that we can add them into our game plan.
We are always looking to learn and grow to best serve our clients.
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