When I am teaching Real Estate classes the most commonly asked question is “How can I improve my Career?” My answer is always “niche marketing.” Niche Marketing is a technique to get the best return for your marketing dollar. All Real Estate licensees in the state of Arizona can sell any real property in the state. If you were to market to every property owner or potential property owner, this would be a Blitz Krieg approach. Just because you can market to all groups does not mean that you should
The best use of the marketing dollar is to specialize and market to a target demographic. This can be first time buyers, investors, luxury properties etc. When choosing your demographic, you must look at how the current market conditions affect that niche. For example, in 2005 foreclosures would not have been a very successful demographic. Property values were rising rapidly and any owner who could not maintain their payments could easily sell and avoid foreclosure. The potential for an agent to be successful by specializing in foreclosures became more favorable as the market shifted and property values began to drop. So, as we look at the market now what will be the newest niche?
Due to the loss of equity property owners are facing today, many are turned over. That is their property is worth less than what it is mortgaged for. As the banks are shifting away from foreclosures, a growing niche is specializing in short sales. An agent that is going to specialize in short sales, will need to take a few things into consideration: The length of the transaction, getting the property priced by the bank, helping the seller through a difficult transition and commission, and the amount of working hours needed to handle a short sale listing.
Short Sales transactions take longer because they have to be approved by: the seller, the bank, the banks investor and insurance company. All that red tape can lead to 2-6 months to get an offer approved increasing the chance that the buyers will rescind their offer and move on. (note: Because of this length of time the short sale must be disclosed in the MLS since this will be material to the buyer.) What does all this mean to the agent? It takes more hours than a traditional listing so you can manage fewer listings and it takes a longer time to get paid your commission. How can you increase your success rate as a specialist in the short sale niche?
Over the next few years, successful short sale agents will start listing properties as bank priced and not as short sales. Meaning the seller is getting price approval from the bank prior to listing it. Then the property can be marketed as a bank priced property. Thereby, taking the long approval process out of it for the buyer. This will also increasing the probability that the bank will accept the buyer’s offer provided the offer is within a few percentage points of the approved price.
