[This article is part of a new Realtor-focused series on the Altos blog, looking at ways agents can use market data to build their business].
In our last real estate marketing article, we looked at ways to attract new clients using real estate market data. Now let’s look at how you can use real-time market data to help buyers answer three top questions:
1. Is now a good time to buy?
As agents, we get asked this question every day, by our clients as well as by people in our broader community. The most common way to assess the market is by looking at inventory reports… but if you’re relying on the inventory reports produced by the local MLS, you’re working with outdated information. These reports are based on the previous month’s results, not what’s happening in the market today.
With real-time real estate inventory data from Altos Research, agents can have the industry’s most up-to-date picture of the market to help their buyers assess timing.
Knowing how much inventory is coming onto the market is also just one of many stats to consider when nailing down the right time to buy. I also like to show clients Altos’ Market Action Index report to give them an instant, broad snapshot of how hot (or not) the market really is, today.
The Market Action Index compares the current rate of sale versus the inventory available to generate an instantaneous point-of-view on whether it’s a buyer’s or seller’s market.
I keep this report ready to go on my phone so I can whip it out anytime someone asks! (Then I email it to them with my contact info afterwards).
2. Where can I afford to buy?
We get this question all the time when working with a new buyer.
“I qualify for $400,000 – where is the best area I can buy?”
Real-time market data can help you zero in on locations AND demonstrate to clients what they can realistically afford.
Here’s a typical scenario: an agent asks their buyer, “Where do you want to live?” The buyer gives their top choices based on what they know or what others have told them. Then the agent asks, “How much do you want to spend on your home?” Quite often, the neighborhoods the buyer wants are way out of their actual price range.
When this happens, I generally pull up Altos’ Median Listing Price graph with median prices for the suggested areas to show them where we should really be spending our time based on their price constraints. This way, we can quickly narrow down the areas we’re out looking at, saving us both time and effort.
For example, say they’re interested in Beverly Hills and have $2M to spend – here’s a graph of the median price for Beverly Hills:
Unless they’re the Fresh Prince of Bel Air, perhaps they should be considering West Hollywood:
3. How fast do I need to move?
Helping a buyer understand how fast to move on a particular house is also imperative. One way to do this is by using Days on Market to show the velocity of the market – the faster homes are selling, the faster the buyer needs to get moving.
We can also look at New Listings versus Absorptions. In the example below, we see that absorptions (demand) have been outpacing the number of new listings (supply) over the past few weeks in Beverly Hills.
This is an interesting chart because it shows how the picture can change week by week. Last month, the data showed many new listings coming onto the market but relatively slower absorption by buyers. Agents using last month’s data from the MLS might advise a client to wait on making an offer based on these outdated insights.
It’s clear in this example, though, that homes are now selling faster than new homes are coming on the market, so the agent might advise the buyer to move more quickly… if he’s using Altos’ real-time data, that is.
For example, a client recently shared with the Altos team that he was helping a Relocation buyer in an area that Altos has identified as strong seller’s market, with a Market Action Index of 60 and where days on market were falling. The buyer decided that she loved one house the agent showed her, but she wanted to sleep on it and see if anything else came on the market.
Using Altos real-time data on new listings versus absorbed, the agent was able to show the buyer that while her target market had seen 5 new homes hit the market, 8 were going into absorbed status… and thus, she would have fewer homes to choose from if they waited. He also used Altos’ Days on Market data to show that the market was speeding up, with the most recently listed homes only staying on the market for less than 15 days. The buyer agreed to write the offer that night and was able to get to a successful close.
Tired of using last month’s data to help buyers make today’s decisions? Learn more about Altos Research solutions for real estate agents.