Market continues to see low inventory for buyers

Bryan Verhei of Retter & Company Sotheby’s International Realty is getting ready to send potential clients a direct mail piece with home maintenance tips.

It’s a little more lighthearted than one he sent in early April urging homeowners to put their home up for sale.

At the time he wrote the letter, there were 384 homes on the market, compared to the 1,200 homes historically available in the Tri-Cities.

This marketing technique is called farming, and although many real estate agents use the strategy to build name recognition, for others, it’s a way to encourage homeowners to sell.

“It’s pretty rough how many fewer houses there are, and buyers are not going away. Even with the rising house prices, they are still saving money because interest rates have been so low. They are being bought up as quickly as they can. Some are only on the market a few days” Verhei said.

But did Verhei’s marketing technique work? He said he hasn’t received any calls as a result of the letter and said he uses the strategy mostly for personal branding to get his name out there.

The number of homes available has increased slightly since then, said Verhei, but the sentiment still holds true: there is more demand than inventory.

“Two hours after sending that letter, the number of homes went up,” Verhei said. “I will say that a couple of days ago we got over 400 homes on the market but that’s changing all the time. We’re just recovering from a winter that has been brutal. It kept people from listing their homes. Interest rates have been at an all-time low so it has brought in a lot more buyers, and builders couldn’t build during the winter because the ground was frozen.”

Verhei said he hopes to see more new construction soon so people not inclined to sell could buy a new home.

“I have several homes pending representing the buyer and some sellers, and we won’t see that improve until we get more inventory,” Verhei said.

Cari McGee of Keller Williams Realty finds calling homeowners directly is sometimes more effective.

“I do actually have a program that sends these out for me, sometimes they respond, sometimes they don’t, but I am finding what works best is actually reaching out to people you know. That’s what gets the best results, and sometimes some of them are interested in listing their house,” she said. “It’s a practice that agents should always do. Now is even more critical we do it so we can get more inventory on the market.”

She said she’ll pick up the phone and let the person on the receiving end know that home values are up and ask if they’ve had any thoughts of selling their home.

For Vicki Monteagudo, realtor and designated broker at Century 21 Tri-Cities, the process looks a lot like matchmaking, trying to pair up a buyer with their dream home.

“We have an abundance of buyers looking for specific properties,” she said. “Sometimes that forces agents to make those rudimentary calls to potentially pair up that buyer with that seller.”

Sometimes, they’ll even do investigative work.

“Earlier this week I had a client who is looking to build in Country Ridge. We were scouting around and we kind of had to put our CIA ball cap on to see who owned the property and try and track them down in hopes of making a phone call to the owner,” Monteagudo said. “In a lot of the cases the answer is no, but it’s important we at least try.”

She said the market is very challenging.

“The market is kind of turned on its head right now. I’m saying to a lot of people it’s hand-over-fist. It’s like we have 100 buyers and it’s Black Friday, but unfortunately we only have three homes to sell,” Monteagudo said.

Similar marketing strategies would be considered if the opposite were true, if there were more homes and not enough demand.

“You would be seeing a lot more broker’s (open houses), a lot more marketing to buyers, and personal invitations to come see a house,” Monteagudo said.

But this trend is not likely to continue for much longer.

McGee said that all market indicators confirm the current housing shortage will begin to soften in the next 18 to 24 months as home builders add new inventory.

By then, she said, there will be more options for home buyers and homeowners may see a slight dent in their home’s value.

“Everybody that I talk to I’m going to let them know, ‘If you’re going to sell your home, try to do it in the next 18 months,’ because the best time to sell their home is now,” McGee said.

Dave Retter, broker at Retter & Company Sotheby’s International Realty, said with just over 400 homes for sale, it’s the lowest number seen in the history of the Tri-Cities. “We saw something close to that in the ’90s but we didn’t have even close the population we have now,” he said.

He said that although he doesn’t know how many “for sale by owner” homes are out there – he did note with the market as good as it is, people can see some success.

“They just need to make sure they have the proper disclosures in place. With real estate agents they get exposure to the entire marketplace and a knowledgeable professional that will help them through the whole transaction. There are a lot of moving parts and negotiation that needs to happen,” Retter said.

He also hopes that once more new homes are ready for sale, the appreciation rate for homes will come down. Appreciation is the rise in value or price.

“We need to get to 5 percent appreciation rate which is really healthy for the Tri-Cities, and an economy that is doing well, we want longevity and consistency,” Retter said. “Right now we’re up in the tens in appreciation, but when we get some more inventory that will balance back out.”