Q&A with Steve Johnston
Sourcing the Right Agent Within the Single-Family Market
With the spring homebuying season underway, REI INK asked Steve Johnston, CEO of IDEAL AGENT, how to sell single-family homes as quickly as possible at the maximum price.
IDEAL AGENT’s goal is to help sellers earn top dollar on their residential property investments and minimize commissions paid to agents (which can be as little as 2%) while receiving high-touch service. The company is based in Tampa, FL and serves home sellers and buyers throughout the nation.
Even after last year’s 17% rise in the price of existing homes, it appears that 2022 will continue to be a seller’s market. What is driving this trend?
It is a pretty incredible time to be selling real estate. I have been in the profession more than 20 years and I have never seen a market like this one.
The migration from the cities to the suburbs, largely fueled by work-from-home arrangements, remains a big driver. In popular suburban markets, this demand, coupled with inventory shortages, continues to incite bidding wars. At the same time, many buyers who left the market last year want to get back in while interest rates are comparatively low, and there are more and more signs of inventory coming soon.
These trends also extend into the single-family-rental (SFR) market. Those potential buyers who cannot find exactly what they want would rather rent larger single-family homes than stay in cramped city apartments.
Indeed, Green Street expects demand for about 7.5 million more housing units over the next five years, and they note that about “810,000 new households are expected to sign leases” for SFRs. The inventory shortages in the SFR market, too, make it an opportune time to sell.
Given this overwhelming demand, why should sellers of permanent residences or single-
family rentals be working with real estate agents? Shouldn’t they be able to achieve top-dollar sales on their own?
No matter what their situation, sellers usually share two objectives—to maximize their yields, and to free up additional liquidity in the shortest possible timeframe.
To accomplish both of these goals, experienced local realtors offer them a competitive advantage. These realtors have the right connections to begin marketing properties before they officially go on the market. They understand what improvements will offer a meaningful ROI, whether to sell with tenants in place or when a home is empty, the maximum value that the market will bear, and how to sort through multiple offers for any red flags.
Many sellers shy away from realtors because they want to avoid high commissions. New technologies, however, have led to the creation of different kinds of real estate models so that sellers do not have to choose between earning top dollar, or minimizing fees. At IDEAL AGENT, for example, sellers are matched with a local professional who consistently ranks in the top 1% of their local market based on transaction and sales volume. The commissions sellers pay can be as small as 2%.
IDEAL AGENT also represents buyers and has been educating them on the value of using a realtor, too—for the local market knowledge and connections they bring to the table. Especially for those who have been shut out of the market once, having access to well-respected realtors, with advance information about properties coming online, is invaluable.
What are other advantages of using realtors in this market?
Top realtors never work alone. They stay connected to a whole local ecosystem of mortgage lenders, appraisers, title and settlement service providers, real estate attorneys and others—educating one another on how they can collaborate to better support sellers and buyers.
This is especially critical when it comes to getting to the closing table, and a mortgage is involved.
Investors and sellers need to be agile and nimble, and mortgage transactions are the antithesis of this. Delays because of title curative, appraiser shortages and so forth can lengthen the housing finance cycle by two or more weeks.
In meetings and networking events, realtors are introduced to local professionals who are focused on providing high-touch service, and are using technologies such as remote/desktop appraisals to streamline mortgage processes. They partner with these professionals and take advantage of new innovations to make sure deals get done as expeditiously and smoothly as possible.
How else are technologies improving single-family home sales and investments?
They are advancing the industry in several important ways.
First, technologies are enabling the various parties in a real estate transaction to add more value by servicing sellers together. IDEAL AGENT is evolving here, too. Over time, the company will expand its original online platform, introducing sellers to a community of professionals who can work with them from listing to closing. Title agents are an example.
Secondly, they will inspire new marketplaces that enable investors to capitalize on growth opportunities more quickly. There is potential for platforms where investors can pay cash for rentals, vetted and sold by realtors at low commissions, for use as long-term, income-generating properties.
A third way is for property credentialing. Previously, I mentioned the frictions in mortgage lending that can be frustrating for investors. There is more industry discussion of ways to minimize this—such as the seller using technologies to provide the advance property credentials (titles, etc.) that their mortgage lenders will need.
Do you have any parting words for single-family real estate investors?
So much of the process of selling and buying real estate is a matter of timing. That is why it is important to find real estate partners who understand the urgency that is involved. Technology can never replace people with empathy, intelligence, drive, experience and a commitment to excellence.
Sellers and buyers should devote the time and care they need to find the right realtor who will be 100% dedicated to meeting their goals, and then follow their proven advice.
For instance, they may advise spending a few thousand dollars on small cosmetic improvements for a $20,000 boost in the sale price of a property. Alternatively, they may advise selling as is to a specific investor, who will pay top dollar and then refurbish it to match the rest of their portfolio.
As with so much else in life, real estate investors should consider their guidance carefully. Whether looking to right-size or to develop a portfolio of single-family rentals, they should avoid going it alone.
Steve Johnston is CEO of IDEAL AGENT (idealagent.com), which provides an exceptional home selling experience at a fair commission (as low as 2%). Its technology platform matches homeowners with agents in the top 1% of their market—who sell houses for top dollar. Email Steve at steve@idealagent.com or call 1.800.750.4014.
