It was a Friday afternoon, and Realtor Debby Braun had just knocked on the door of her sixth Dunwoody home. She was looking for someone who might want to sell.
“There are no houses,” Braun said. “Desperate times call for desperate measures.”
A lack of homes for sale means real estate agents like Braun are taking unusual steps both to win business and serve the customers they have. They’re cutting commissions to persuade sellers of their worth. They’re marketing houses by word of mouth or to known buyers without ever listing the house. And, yes, they’re knocking on doors in search of willing clients.
All are symptoms of the metro area’s strange housing market these days.
Prices are rising, but sales are down. More homes are coming on the market, but the numbers are not matching demand. A normal market has a six- to seven-month supply of homes. At the end of April, there were 4.1 months worth, said John Hunt, a senior analyst with real estate analysis firm Smart Numbers in Atlanta.
Because of high demand, houses that do hit the market often sell in a matter of days, especially in sought-after areas both inside and outside the Perimeter.
Because homes are moving so quickly, real estate agents who know a potential buyer are again using pocket listings, or word-of-mouth sales that do not place the home on the area’s listing service, where other buyers can find it.
Cantey Davis, president of First Multiple Listing Service, said he has undertaken a public relations campaign to encourage agents to list their properties. Not doing so, he said, keeps homes from being exposed to the full market — and keeps sellers from getting the top price.
“It’s prevalent, more so than what would be considered normal,” he said. “We do have a shortage of inventory and buyers can’t find what they want. It’s frustrating to agents representing buyers.”
Unlisted homes also cannot be used by appraisers, and in the past have led to appraisals that did not keep up with escalating prices in a neighborhood. When the appraisal does not match an offer, a buyer cannot get a loan for the full offer amount, and deals sometimes fall apart.
Davis may be encouraging agents to buck the trend toward pocket listings, but it’s often buyers and sellers who are seeking it.
Madalyn Suits, a Realtor with The Suits Team at Keller Williams Realty Peachtree Road, said she will put a “coming soon” sign in the yard of a home that will be listed several days later. If someone makes an offer before the house it officially for sale, great — “Let’s call it a day and be done,” she said. “Let’s not do 10 more showings.”
Todd Emerson, president of the Atlanta Board of Realtors, said sellers who don’t want to be inconvenienced by people trampling through their house are often eager to make a quick deal. Still, he said, it “truly is a disservice.”
“It’s devaluing and diminishing the value by not truly exposing it to the full marketplace,” he said.
Pocket listings can also put the agent in the position of getting a commission on both sides of the transaction — the sale and the purchase.
Meanwhile, more homeowners look at the market and think they can sell just by putting a sign in their yard, with no agent at all. To counteract that “DIY” mentality, agents are sometimes reducing their commissions to convince sellers it is in their best interest to enlist their services, Emerson said. He and other agents said their work can increase the total sales price by far more than the commission, but sellers who see a brisk market aren’t always convinced.
Concessions vary, he said, from a quarter percent reduction to several percentage points. A typical commission is about 6 percent — split between the buyer’s agent and the seller’s — or $12,000 on a $200,000 house.
“As demand continues, sellers are driving that and agents are responding to it,” Emerson said. “Sellers are thinking if they can do it themselves, why pay a full and fair commission?”
In addition to the low inventory and rise in for sale by owner signs, the National Do Not Call Registry and decline in land line use has made it harder for Realtors to find potential clients, said Amy Johnston, a colleague of Braun’s at Keller Williams First Atlanta. She has also taken to knocking on doors to introduce herself to potential clients.
Real estate agents used to spend a lot of time going door to door, inviting people to open houses or trying to make appointments they hoped would eventually lead to new sales.
The recession slowed the practice — and considerably thinned the ranks of agent.
Now, with the market slowly recovering, agents have taken to knocking on doors once again. Their pitch: The housing market is better, values are up, you can probably sell for more than you think.
It can be a tough sell. Kimberly Hall, a Better Homes and Gardens Realtor, said she may get one transaction for every 100 people she encounters.
Door-knocking can even get agents in trouble with local authorities. Some areas — Dunwoody and Cherokee among them — have ordinances prohibiting solicitation. Both Braun and Johnston were warned by police they needed a permit to knock on doors.
Braun said she was “stunned” by that, noting that some of the top Keller Williams agents across the country built their business through knocking.
Hall, who was asked by a Douglas County homeowner not to come back to his neighborhood, said the effort is more fruitful than just leaving information at the door.
“It lets them know I’m a hard worker,” she said.
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