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Realtors Becoming Car Salesman
By Jamie Kennedy
Commercial Agent
May 2009
People all across the blogosphere are writing about the how the struggling economy is affecting the way they do work and how they operate on a day-to-day basis. Many of them are correct. In a changing economy, sometimes the worst thing for a person today is to bury their head and hope the storm passes. For us, as realtors, we need to understand how clients, buyers, sellers and tenants are approaching the market and adapt. Perhaps as Realtors, we need to be more like car salesmen, and be flexible.
In years of old, sellers would come into the market with a price. Careful consideration was given to this number. It was a number that represented the mix between the value of a property and what the market would pay for the property. I heard a recent building company president describe this past market (i.e. 2004/2005) as "Mrs. Market". Mrs. Market was very nice, easy going, didn't ask for much and was easy to deal with. Mr. Market (i.e. today's market) is not quite the same. He carries around a baseball bat and expects a lot more than Mrs. Market did. Mr. Market very subtly changed the terminology in selling property. It is no longer the "price" but is instead merely your "asking price"; the price that you are asking buyers to consider. Sellers set "asking prices" and almost plead with buyers to consider that price. Mr. Market does not have quite the same sympathy with sellers as Mrs. Market however. It is this view that insists that we put on our car salesmen hats!
Mr. Market enters deals and negotiations in the same manner that a person enters a car dealership. Yes, there is a lot of inventory and fancy new ways of advertising and marketing, perhaps even some incentives offered, but Mr. Market has a specific view on price. The price that a car (or in our case, a property) has, is fairly insignificant to Mr. Market. Mr. Market comes to table prepared to beat up the seller on price. He demands more than Mrs. Market and cannot be sweet-talked into a deal like Mrs. Market. Unless, you have a property on "Boardwalk", Mr. Market wants incentives, concessions, and clauses in addition to a lower price. We the realtors (i.e. car salesmen) were once able to offer upgrades on top of the selling price in order to make the deal more attractive to the buyer. Mr. Market has caught on to that idea, and has his own opinion. He knows that properties are not selling/leasing like they used to, and however much you do not want to do business with Mr. Market, he knows that you need to in order to stay afloat. Mr. Market will not only drive down the price and undercut your "asking price" but he also wants new carpet, free rent, short-term leases and any other concessions he and his baseball bat can get at the negotiation table. So what does this mean to us, as Realtors?
There is no doubt that our relationship with Mrs. Market was a good one. We had fun together, we made money together and we thought our relationship was going to last forever. Unfortunately, that fairytale ended, and we are stuck dealing with Mr. Market. In order to do business with this new-age buyer, we have to bite our tongue and often give in to these demands. We need to make sure our sellers understand exactly whom they are dealing with (i.e. today's market). We have to compromise with our better judgment and meet Mr. Market in the middle. Perhaps we offer a few months free rent, but add those months on to the backside of the lease, or spread that free rent over the term of the lease. Perhaps we upgrade the interior of the property, but only cover the first $10/SF. Perhaps we concede on price, but demand a larger deposit in return. Whatever we can, we have to adapt to this new way of thinking and court Mr. Market as best we can.
Hopefully in a few months (perhaps years) we will meet Mr. Market's sister who is far more understanding and ready to be more friendly, but if we want to be successful until then, perhaps you need to approach deals with a car salesman mentality.
