Why Is Inventory So Low?NEIL BADA
Mike Ferry: And welcome to Mike Ferry TV, it is a week of March 7th, 2022. Every year goes by quickly, which means one of the most important things each of us can do is make sure that the time we’re spending as a professional realtor is production-oriented time versus almost anything else. And there are so many activities we can be involved in to be more productive. Let’s just make sure that 60 to 70 percent of each day is involved in something that leads to a listing taken or a Buyer controlled sale. It will certainly make the end of the first quarter of this year; it’ll make you feel a lot better if you’re doing the right stuff. There’s a lot of challenges we face in real estate that has never changed. I’ve been in real estate since I was 18, i’m just turning 77 around the corner. It’s a long time, but I also understand that many of the challenges we face today are very common. But because our industry has such rapid and continuous turnover of agents, we don’t want that to happen to you. Many of us never see all the ups and downs. 2009, 2010, 2011, 2012. We had more homes for sale than we’ve ever experienced in my 50 some years in Real Estate. Everything was for sale 2020-2022. We have just the opposite a total scarcity of listing inventory.
Mike Ferry: So, the question I’m asked most often is why is the inventory so low? I started putting together a list of some of the reasons and I think the better. We understand why the inventory is low, the better chance we have of doing something about it very quickly, individually. Because my belief is and I’ll talk about it more in a few minutes. We as individual agents control the amount of business being done in our community by the amount of time, we spend talking to people about our wonderful business called Real Estate. Oh yes, we know interest rates go up, they go down. There are challenges in the economy. These are all normal functions that take place on a regular basis in almost any industry. But the one thing that we can control is the amount of conversations we have with people we know and people we don’t know about Real Estate, because the hottest topic in most people’s minds today is Real Estate and the appreciation of prices. So, the more of those conversations we’re in, the better off we are. So here are some of the reasons that I’m hearing from the top producers all over North America. Number one new home construction cannot keep up with demand. If you live, for example, in most parts of Southern California, if you live in any of the major cities or any of the really active cities in the U.S.
Mike Ferry: or Canada, it’s hard for builders to build a lot of properties because the cost of building not just the lumber, but all the costs, the wages the land has increased. So we’re seeing a little slowdown in construction in some of the markets, which keeps the inventory low. Why do I say that? We have to understand when there’s new homes being built. People’s interest rises. They want to buy one of the new homes, which means they have to sell the one they’re in. So new home construction is actually part of the foundation of what takes place when it comes to inventory. Or number two, I wrote down the objection, which we hear every day. If I sell, where will I go? Well, if you decide to sell and we could find the home of your dreams, where would you like to live? Well, I like to live in this area. This community. Fine. My job is to go find a home that a Seller willing to sell in that community so you can sell yours and buy the next one. See to me the objection, “If I saw where would I go?” is an open invitation for you to go out and find a listing that meets the needs of the Seller/Buyer. So now you create an additional transaction for yourself.
Mike Ferry: Still common today. Here we are in March of 2022, people are still afraid to let the whole COVID problem into their home and I still hear it all the time and it’s an understandable concern because that was not certainly something any of us looked forward to. And how long it lasted was longer than most of us thought it would last. Number four, we actually think that working with Buyers is easier, how can we possibly think that. You take a listing today in almost any neighborhood in North America and there’s going to be multiple offers within three to five days, maybe seven at the most, and you’re competing against 7, 8, 10, 12 here in Las Vegas, Nevada, where we live, 20 offers is still very common. We actually believe working with Buyers is easier. It’s more difficult than working on finding a listing. The next point of why the inventory is low, the speed of which listings sell. I don’t think most listings even hit the market or MLS. You know, we list a property. We hold it for two to three days within the office we worked for. Is that ethical? It depends on your board and what you guys, how you choose to operate, but it’s very common. The listing sell for a couple of days. Agents they often sell. It never goes to MLS, which shows then that there is nothing for sale when actually there probably are more homes for sale than we probably are aware of.
Mike Ferry: But the speed with which they sell confuses the numbers in most cases. The next reason why inventory is low. Greed. Simple greed. I would say that so many Sellers today are not listing or trying to list for 10% 20% over from market value. They’re trying to list for 50%, 40%, 60% over. And I mean, it’s almost hard to believe. And then the worst part is agents are taking them and they’re selling for 45% over CMA or fair market value. So greed versus motivation. And we’re looking for people that have the motivation. I wrote down next reason why that inventory is so low agents rely or sadly believe that because of their marketing, social media branding and the videos they create, the people are going to call them. We have a lot of people that watch Mike Ferry TV every week. We’ve had this program on now for, I don’t know, 15-18 years at least, and I mean, we’ve had millions and millions of views over that extended period of time. So as a result of that, you know, we think that what we’re offering is information for you to use to become more productive. People are calling our office saying, sign me up for Coaching and I watched Mike Ferry TV, I watched a video of Mike Ferry.
Mike Ferry: I want to go to all your events. For some reason, we think that the branding and the marketing and social media and videos are going to pre-sell the Seller for us. Trust me, talking to people is the answer. I wrote down to reason why inventory is so low. We rely too much on purchased leads and we don’t know how to prequalify or convert them into actual transactions. Next reason why, you know this is probably the most common problem inventory is so low. We don’t prospect because we don’t know what to say or what to do. If you’re a regular watching Mike Ferry TV, you’ve heard me say for years, go to our website, download the scripts, whether it be a Past Client Script, a Just Listed Script or even a For Sale By Owner script. Learn what to say. So the confidence to do what you’re supposed to do. The next reason why the inventory is so low, which may sound a little unusual, but think about it before you decide to judge it. Most of us overwork a small database. We overwork a small database. You have 100 names in your database. There is a maximum return, and if you’re talking to those people every 45 days, the excitement of talking to you starts to wear off unless you have a very strong personal relationship.
Mike Ferry: So I’m going to suggest to you that you consider building your database to build your sphere of influence, which anybody can do if they choose to, then work them to expand your opportunities for listing. The next reason why we don’t list a lot of properties, we don’t have direct sales experience. Therefore, we don’t have the direct sales skills, so we stay with Buyers which require minimum skills. I’m sure there are many more reasons why the inventory is low, but I also am very sure that we are the solution to the problem. I Coach half a dozen very strong personal producers that do big volume, and I kiddingly said two weeks ago on my Coaching Calls on a Monday and Tuesday, you know that at any time you want to take a listing, you can create one. And they all said, “Yes.” I said, “So, I guess we have to make sure that you want a new listing at least once a week or maybe twice to get the 8 to 10 you want per month.” That is doable, it’s learnable, it’s achievable by every person, whether you be a new licensee or a veteran. You can learn to take a lot of listings, go through the process, spend the time because the return on your investment is large. Thanks for watching Mike Ferry TV. See you next week! Thank you.