VOL. 122 | NO. 141 | Monday, July 30, 2007
Slots Aren't Paying
By Eric Smith
Editor's Note: This is the first in The Daily News' three-part series "Housing Hurdles," an examination of the slumping real estate market and what it means for Realtors, builders and homeowners.
Like many Realtors, Jay Fletcher experiences highs and lows of the real estate business through his wireless handheld device - that ubiquitous tool of the new millennium.
Fletcher, an affiliate broker with John Green & Co. Realtors in Collierville, receives an alert on his BlackBerry whenever a home showing for one of his listings has been booked by the main office.
"It goes 'ding-ding' like a slot machine," Fletcher said. "I'm thinking, 'Great, I've got something going here.' But I might get 25 one week and two the next - it drives me nuts.
"And lately my slot machine has not been going off as much."
Though Fletcher has enjoyed plenty of success, he also has seen the downside of the business during his two-and-a-half years in real estate.
"We've had a really good run this June and July, but from January to March we didn't do anything," said Fletcher, who works alongside his mother, longtime Realtor Marsha Fletcher. "It's a real cyclical thing. We've always got activities to do - dealing with customers and building relationships - so I'm not sitting around doing nothing. It's just that the closings are sporadic."
What goes up must come down
Fletcher is not alone. Residential real estate sales are down - way down - in Shelby County this year.
Home sales for June fell 21.3 percent from June 2006, and sales during the second quarter this year sagged more than 18 percent compared to Q2 2006, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.
But why did sales decline about 20 percent when compared to the same month or quarter last year? And why have building permits and mortgage filings been slumping too?
The answers vary. Some believe widespread fear about a soft market - whether real or perceived, nationwide or local - has been rattling consumer confidence and preventing potential homebuyers in the area from taking the plunge.
Many cite the fallout from a nationwide foreclosure fiasco. Subprime mortgages tallied nearly 25 percent of all mortgage loans in Memphis last year; with so many subprime products no longer on the market, it makes sense that the current sales decline almost equals last year's subprime borrowing percentage.
Or it could be a simple case of relativity - what goes up must come down. After all, 2006 set numerous sales records, and 2007 is on pace to be the second or third best year in history.
Whatever the reason, sales are down and real estate professionals are left to cope with the aftermath, whether that means quelling the fears of their clients or beefing up efforts to land business.
Like professionals in any volatile industry, they are finding creative ways to weather the storm - however turbulent or tame it might be.
Finding what works
Numbers don't lie, as the old adage goes. With that being said, Briscoe Ellett, an affiliate broker with Weichert, Realtors-Chapman & Associates LLC, always examines the housing numbers closely, whether it's sales data, home valuation or time on market.
"(My BlackBerry) goes 'ding-ding' like a slot machine. I'm thinking, 'Great, I've got something going here.' But I might get 25 one week and two the next. ... Lately my slot machine has not been going off as much."
- Jay Fletcher
Affiliate Broker, John Green & Co. Realtors
Ellett said he is especially keen on the numbers he gleans from sign-in sheets at the Downtown open houses he hosts on weekends, paying particular attention to one column on those sheets - the one where visitors indicate how they discovered the home.
"One of the big things in trying to measure the success of an open house is (to) find out how the people found out about me," he said. "It tells me whether my marketing is working and which avenue to bolster and put more money into."
Almost invariably - in this case, 96 percent - visitors tell Ellett that strategically positioned signs and balloons on busy intersections in the neighborhood alerted them to the open house.
And since the more people who come into a home the higher the probability that someone will buy it, Ellett is meticulous about getting eight signs with two balloons affixed on each - all in Weichert's signature yellow and black scheme - at the right street corners prior to the open house.
"One of the key things is picking something that's going to get your attention," he said. "After a while, you've seen enough of (the signs) that your eye doesn't catch them."
Real estate marketing signs of all shapes and sizes can be spotted around town. This is true no matter how the market is playing out.
From the largest billboards touting the services of a national company to the smallest yard signs telling passersby "This Home Sold in 15 Days, Let Me Sell Yours," good signage is essential.
Jason Green is owner of Think Signs, which is garnering more and more business from residential and commercial real estate brokers in need of unique marketing. To achieve this, Green said it's paramount to create a consistent brand using a specific text and color on all signs.
"That helps potential customers to spot your sign and recognize it as your sign before they can even see it," he said.
It's also imperative to keep the signs simple and refrain from putting too much information on them.
"The more letters you put on there, the smaller everything has to be," he said. "It's really important, if at all possible, to keep it to a minimum. That way it increases the distance that people can actually see your sign and read what it says. It helps them to recall the information that's on there."
And name recognition and recollection gets people in the door, which in turn gets more sales - the goal of every Realtor when their competitor is trying to sell a similar house down the street.
"That makes it even that much more important to have the right signage, the right marketing, the right advertising out there," Ellett said. "There are things people have to do to differentiate themselves."
Standing out from the competition
Differentiating themselves is mission critical for Realtors, who are plastering their names and faces and phone numbers all over town - from bus stops to grocery carts.
Surprisingly, despite the current dearth of home sales, more and more people are turning to the profession.
The Memphis Area Association of Realtors (MAAR) has seen an increase in membership from 2006 to 2007. The July MAAR membership is 5,374 Realtors, up from 5,306 in June, and up from 5,127 in July 2006.
Still, the rise of Realtors and shrinking of home sales means one thing.
"We've got more competition than ever before within the business," said MAAR president Neil Hubbard, a broker with Prudential Collins-Maury Inc.
But most Realtors, even those who have seen a slowdown in traffic and contracts, remain bullish on the market. Some are as enthusiastic as ever. They wouldn't be out there trying to sell homes if they weren't.
"It's not like we're sitting around twiddling our thumbs," said Carol Lott, owner/broker of Re/Max on the River. "I'm the eternal optimist, and until it hits me in the face and we go belly-up or something, I think we're going to be just fine."
Signs everywhere indicate that she just might be right.
Coming Wednesday, "Housing Hurdles" looks at the impact a slow real estate market has on home builders.