So what’s your real estate investing season? No, it’s not like asking “what’s your sign?” … It’s very well known that in real estate, the market slows down and picks up at different times of the year. But for investors, often the slow time can be the best time for picking up great deals!
Do YOU have a preferred time of the year for picking up your property acquisitions? When and why?
Check out this interesting article on the seasonality of real estate markets and agents as a whole. I would love to hear from you on how you relate to this article. Enjoy!
Working With Seasonal Ups and Downs
Overcoming seasonal markets in the real estate and mortgage industry can seem like an uphill battle. And while we’d like to wave our wand to even out the highs and lows, magic, it seems, only works in the movies.
We all know the housing industry is subject to ups and downs, as larger numbers of Canadians prefer to buy their homes and other real estate holdings in the spring and fall.
In Canada, we’re big on negotiating our deals around the school year of children, says Paul Hecht, a Kelowna real estate agent and author of Everyday Real Estate Millionaires: How Average People Really Do It. A large portion of sales transactions occur around August and September, just before parents enroll their kids in schools. After that point, sales typically slow and consumers aren’t thinking of moving now for another eight months.
“A lot of people want to let their kids finish the school year,” Hecht says. “When school is getting towards the end, people start thinking about selling or buying in spring. That’s a big factor that creates more activity.”
But most people are motivated to buy and sell homes when a momentous event happens in their lives such as a divorce, retirement, a marriage or job relocation. While having control over those big moments in a person’s life is impossible, there is something you can do to prompt a steadier stream of business.
Hecht recommends realtors look to real estate investors for clients if they want to weather the storm of quieter buying seasons. Investors, he says, don’t really care when they purchase a property.
“Some of the best investors I work with buy in winter because there’s less competition then,” he says. “They don’t really care when they buy because it’s all about the numbers. As long as the property works and makes sense they’ll buy it.”
But Rob Faulkner, president of the Nova Scotia Association of REALTORS says people buy homes at any time of year. “Of course, spring tends to bring out more buyers and there is usually less homes listed during the winter,” he says. “But that means less competition for the buyers and for the seller.”
A good real estate professional can make a listing appealing to buyers regardless of the weather. Faulkner recommends urging client or potential clients to take photos of their property in the spring and summer so the agent will have a picture-perfect representation of the house even if they list in winter.
Of course, other factors at play affect the market’s ebb and flow. Interest rates, affordability and supply affect consumers’ tendency to buy or sell, says Navtaj Chandhoke, founder of PREIGCanada.com, a professional investors group.
“People tend to buy more during a boom time,” says Chandhoke. “It’s contagious, like a rat race, because Jim bought, Sheila wants to buy. It’s sort of like a feeding frenzy. I think everyone wants to buy when there’s short supply. It speaks to our human psyche. People start to think they’re not building any more houses. And that’s when a lot of speculators jump in. But the biggest problem is the speculators are in for a quick flip.”
Leslie Penney, vice president of business development at APlus Mortgage Group/Mortgage Alliance in St. John’s, says the market has been hot in Newfoundland and while that’s great news, it makes it tough for housing industry professionals when the market softens.
“When you’re used to deals falling in your lap you fail to recognize that you’ll need to work hard when times are slow,” says Penney. “I have found that over the past couple of years in the mortgage industry there hasn’t been much down time.”
Low interest help fuel the market and seasonality plays into this as well, he adds, noting that he anticipates the spring activity will ride the wave into early fall. By late fall and early winter many consumers tend to “stow away” and wait for the spring market, says Penney
“As a mortgage broker, this is when you have to shuffle your deck and play a new hand. As I said earlier, interest rates are super low, so it makes for a good time for current homeowners to refinance. You have to go back and work your database and generate repeat business.”
That’s what Waterloo’s George Passmore does. As a mortgage specialist with TD Canada Trust, Passmore says referral sources and centres of influence are key in building your business especially during slower spells. Natural targets are realtors and the give-and-take relationships that occur between these exclusive but mutually dependent industries, he says.
“I regularly email past clients with valuable mortgage information and rate updates,” says Passmore. “I contact home builders and try to work new builder sites. Much of what we do is word of mouth based on relationships. I’ve also joined service clubs and given back to the community.”
Penney wholeheartedly agrees. “You have to be constantly branding and in front of your clients and prospects,” she says. “If you wait until your pipeline is empty before you start looking for new business chances are that you will go through a dry spell.”
Past clients always make great repeat clients, he adds. They may be looking to refinance their first home or to finance a second. If you’re not in front of them, the chances are much greater that they may head to their local bank. The key is planting seeds before you need to harvest them, he says.
“I’m not sure about across all provinces, but here many brokers work the provincial registry of deeds and solicit clients this way,” Penney says. “There is a whole lot of work with that, especially now with the do no call list; however, it’s a great way to build your clientele.”
Some agents work around down times, take much-needed vacations and time off. Most likely realtors and mortgage brokers are gearing up for the spring selling season, but you’d probably be hard pressed to find an agent in the office past the middle of December, he says.
Penney takes a page out of former GE chairman Jack Welch’s book when it comes to marketing. It’s important as a mortgage broker or realtor, he says, to be flexible and find ways to sell yourself in any situation. “One of my favorite quotes is by Welch, who said ‘If you’re stagnant, you’re dead.’ “
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