How to Survive the Winter of 2014-2015 as a Real Estate Professional?

10/13/2014 11:57 AM (CST)

helpIt’s official: the real estate market is flat and, in fact, slightly declining. 

"The pace of year-over-year appreciation continues to slow down as real estate markets find more balance. Home price appreciation reached a peak of almost 12 percent year-over-year in October 2013 and has since subsided to the current pace of 6 percent," said Mark Fleming, chief economist at CoreLogic.

Many real estate professionals found themselves scrambling for new deals, not really prepared for the winter of 2014-2015.

What exactly is happening and how to survive this winter as a real estate professional?

A lot of sellers (especially Baby Boomers) will continue waiting for their numbers and won’t sell, unless they absolutely have to. Sellers don’t understand the market the way real estate professionals do, so they will be holding on to their unrealistic expectations based on comps that are months old.

It’s obvious by now that the current market is not a first-time buyer’s market. Millennials will continue waiting for the better times by renting or hanging out at their parents’ basements. In terms of traditional equity sales, it’s just move-up sellers and there aren’t that many of them. By and large, traditional market is out of the window again.

It’s important to understand that real estate is a cyclical market, so diversification and having a good business plan is very important.

Not that long time ago too many agents were 100% REO. REO’s are still there, but they went to and the likes. What happened to all strictly REO agents? They’re struggling or abandoned real estate altogether.

At the same time, let’s not forget that during 2009-2012 when the economy was struggling, there was still a lot of money made. How? Investing, fixing and flipping, and doing short sales. Successful real estate professionals understand the cyclical nature of their business and understand that when one opportunity closes, it creates another opportunity.

So, is there any kind of low hanging fruit right now? Kind of, but you have to pick your niche or, ideally, a few niches and be prepared to work.

1) Doing deals with cash investors. If you cultivated your investor network, there are still deals to be closed and money to be made assisting cash investors. Smart investors are still able to find deals below market value, albeit not as easily as just a year ago. 

2) Short Sales. Short sales are back, but there could be way more of them if real estate agents actually went out and proactively sought them out. Many homeowners never make a decision to take the short sale route, so they need your advice and advocacy.

3) Probate. It’s a difficult niche because it requires specialized knowledge and tons of patience. Also, the pool of probate properties is not that large at any given time. However, if you do educate yourself and market your business as probate specialists, it’s a great way to branch out to in terms of diversification. Most likely, probate deals will start coming in as referrals after you close a few, and it never hurts to have one or two in your pipeline in addition to whatever else you choose to specialize in.