When we take a look back at the residential property market in New Zealand over the last couple of years, and the large number of new people joining the sales force, it could mean that as many as 40% of the now active sales force may never have worked in a market of stable or easing values.
We have all read of the many localities that have enjoyed large capital gains over that period:
- some areas where properties have sold before any marketing ever commenced (too many in my view)
- many sold and easily exceeded the vendors expectations, especially at auction when multiple bidders competed,
- and, the vendors asking price was met by one of the first buyers to inspect.
This has meant that the focus in the sales force was in securing more listings – and wasn’t it competitive? - as it was very easy to sell in most localities. And now we have many sales people who know no other way.
All the indicators of a growing buyer resistance to the new values began to show itself in the second half of November in 2021. Some houses started to sit as their owners continued to place their expectations above the market and the eager sales force may have supported their views in order to secure the listing. Whilst the summer holidays got in the way, and may have distorted the trend, and we won’t know a real indication of any new market direction until the February sales statistics are released in March. If the anecdotal evidence of the last few weeks in January and early February (when this is being written) was to continue as a trend we will need to see a change in the focus of the sales force – and many will not have worked in this type of market before.
The initial indicators are pretty simple to read:
- less or no bidders at auctions
Quieter open homes
- less multiple offers
- houses the sales force thought would sell, simply sticking
- increase in median days to sell
- more for sale signs
- the same adverts repeated a lot more.
All this leads to the buyers having more choice and suddenly the negotiating power, held recently by the vendors, starts to move to the buyers. They can now start to shop around. So FOMO moves from Buyers to Sellers
Now we may move to a market, where the sales force focus changes from competing for listings to servicing listings and competing for buyers.
This will be a new skill set for many and managers will need to address this new focus to avoid listings running through to expiry – not seen for some time.
As always the vendors will be in resistance about accepting any easing in values or that their expectations, as fuelled by media articles and stories of amazing prices in their locality last year. It may take time for the message to get through and some salespeople will find themselves with listings purely because their vendor wanted to access the capital gains made over recent times. These are the vendors who will resist any change the hardest.
As listing stocks build up it will be a case of collecting market feedback and delivering this in a format that the vendor can digest – even if it takes several doses or they protest that they are taking no less.
So some newer members of the sales force will find themselves in a new role – questioning whether they want this listing at all. The process of educating vendors to any change in values, or the fact that the market has stabilised, will mean that some will need to allow more time for the message to get through and therefore marketing programmes may need some adjustment.
So the first step may be to allow more time between launching the marketing and auction or tender date. These were shortened during the flurry of last year to make sure buyers didn’t wander off and buy something else. They simply wouldn’t wait 4 – 6 weeks, so campaigns were shortened to 2 or 3 weeks and in some cases even less. Now we need more time to educate the vendor and campaigns may need to be extended by 1 or 2 more weeks to allow time for the news to sink in.
The second step is to maintain your profile marketing focus. During the last year it was vital to promote properties with profile marketing as our vendors deserved the opportunity to achieve any market premiums that buyer competition encouraged. Now the marketing is absolutely vital to secure the buyers that are active and those that are brought to the market by strong and emotional marketing. Any easing in the market means the competition may need to be created by strong marketing – the competition that existed last year simply because demand outstripped supply, may need prompting through strong marketing campaigns.
The third strategy is to absolutely ensure your market feedback is delivered in writing and followed up with a face to face meeting a day or two later to ensure the message is received.
The habits that some sales people got into last year, a quick phone call (and early sales), will not serve you well if we see the apparent easing continue.
This will be a new skill for some sales people to develop and they and their managers need to focus on the following issues:
- track carefully the time any property is on the market and take early action
- check you have a strong marketing campaign
- collect the facts and remember bad news may be necessary
- have your feedback letters read by management before posting if you dare.
- do you need to change what you say at open homes and to phone enquiries?
Whatever the market, the real professionals prosper. It is a case of making sure we are adapting to any changing market conditions. Coupled with that is that some core activities don’t change and it is a question of once again focussing on these core activities and doing them superbly.
Posted: Tuesday 15 February 2022