Welcome to the December edition of Monday Market Minute with Carrie McCormick!
In this episode Carrie talks about how the Chicago market has slowed and how both buyers and sellers are backing off at the moment. What do real estate brokers say to clients when buyers think homes are too expensive and sellers think pricing is too low? I also provide a marketing tip how working with management companies will open up twice as many rental listings than what’s on the MLS.
D.J. Paris 0:14
Hello, and welcome to another episode of Keeping it real. The only podcast made for Chicago real estate brokers by Chicago real estate brokers. My name is DJ Paris. I am your host and welcome as well to our monthly episode of the Monday market minute with Carrie McCormick from App properties. Welcome, Carrie.
Carrie McCormick 0:33
Thank you so much excited to be here this month, it’s December, it’s the end of the year.
D.J. Paris 0:38
Well, and before we get started, it is the end of the year. And just in case you’re new to the show, who is who am i Who’s Carrie McCormack? Well, I am just the host, so enough about me. But Carrie is one of the top top top top producing realtors in the entire Chicagoland area out of just shy of 40,000 Realtors, she is in gosh, I think the top anywhere from like the top 20, usually in the top 20. So she is in the top like 1% of 1%. She’s done hundreds of transactions just this year alone, total superstar producer, we are so grateful to have her on the show. And she’s too busy to do this. And yet she still finds time time or too busy for you. Well, you’re very sweet. And we love having you on the show. So what Carrie does, by the way, she comes on once every month, and talks about what brokers need to know in the public about what’s going on with the real estate market in Chicago. So I will turn it over to you.
Carrie McCormick 1:31
Well, thank you very much. And I always like to think it’s like boots on the ground. Because, you know, obviously, this is my full time job. I’m entrenched on the streets every day in our market, and I’m talking to buyers and sellers every day. So it’s you know, it’s really just firsthand knowledge and what I experience in the market. And probably all of our listeners know that this Chicago fall market has been extremely challenging for our sellers. And what I think that that’s happening is that sellers are trying to cling on to the spring prices, you know, we had a great spring here in Chicago. And sellers still want those prices that their neighbors received. While there just are not enough buyers out in the market right now that are willing to pay those prices. So recently, I read a Fannie Mae survey, and it said the proportion of people who think it’s a good time to buy a house has decreased significantly from the spring. So it was an to net 21% from 29. So it started at 29%. And then it dropped to 21%. But also the proportion of people who think it’s a good time to sell has dropped as well. And that dropped about 10%. So if you look at the math, you would expect, you know as a zero sum transaction, right, so both abortions fell. But it seems that sellers are unhappily realizing that they’re not going to get what they thought their house was worth six months ago. And buyers think that the homes are too expensive. So this explains right now why their transaction volume in Chicago has fallen this fall substantially.
D.J. Paris 3:13
Yeah, what are you telling your Do you have some do not do you but obviously you have had selling clients who have overvalue their homes. Are those difficult conversations?
Carrie McCormick 3:23
Oh, they’re extremely it’s not that they’re overvalued. It’s that the market has changed. Right? Right. It’s interest rates have gone up, taxes have gone up. So the affordability factor for buyers has completely changed. So sellers are still expecting their price, but buyers can’t afford it anymore. So it’s something has to shift. And it’s kind of a standoff between buyers and sellers. With with the big questions kind of like the chicken in the egg is what’s going to come first our price is going to drop, and buyers are going to react and start buying or, you know, our buyers just going to change the affordability factor instead of buying let’s say a $700,000 house this year, they’re going to end up buying a $500,000 price. So we’ve got a little standoff going between buyers and sellers right now. And it is a little difficult conversation. But that’s our job as Realtors is to be an adviser to our sellers, to tell them how the market is tell them how to position themselves for success, depending on what their goals are.
D.J. Paris 4:28
I think that’s great. Do you have any predictions for the spring?
Carrie McCormick 4:32
Well, of course nobody knows how the spring markets going to go but I’ve been doing this for this January will be 20 years this will be my adulation anniversary this January. And historically Chicago has always had a great spring market. This is our time to shine. And buyers have been on the sidelines for quite a few months now. So our fall market was slow or winter market was slow. So they’ve been on the sidelines kind waiting this out. I think they’re getting a little fatigued with that. And I think they wrap their arms around, again, the interest rates, the taxes, just their affordability factor. So I think we’re going to have a spring market, a good spring market, I don’t think it’s going to be anything crazy. But I think it’s going to be there. We’re going to, you know, move some inventory. And I always tell people keep in mind, we’ve got a good economy, right. There’s nothing wrong with our economy’s doing doing well. Young adults are forming families and they need a place to live, whether it’s rental or you know, if they’re going to buy, we have currently we have low housing inventory, we have good employment, we’ve got some great companies here in Chicago that spurring employment growth. And keep in mind, Chicago is a great city, and people want to stay here. So we’ve got a lot of positives. We just need these buyers to make a move. And I think it’s going to happen in the spring.
D.J. Paris 5:53
Awesome. Well, I. So in addition to Kerry’s market, minute, I do a little marketing minute. And I wanted to piggyback a little bit on what Carrie said with the sales market being slightly less than I think brokers who are listening or even the public listening would prefer. And what we’ve seen, at least even at our firm, I’m sure at Kerry’s firm as well is there’s been a little bit more movement in rentals. So I wanted to give you a quick marketing tip. If you’re a broker and you find yourself either wanting to do rentals or needing to do rentals or just trying to stay busy while the sales markets maybe a little slower. So if you find yourself wanting to do more rentals, or even just having a client that needs a place to live, typically it’s been my experience that brokers will traditionally go to the MLS as of course they would for a sale look for whatever rentals are available. And that’s their database. And that is a database. However, it just for people listening Did you know there is a another database that is a more invisible database, but also works directly with brokers but do not does not list their properties on the MLS. These are property management companies that either own or manage or both have buildings, whether it be high rises, or three flats, really buildings and all shapes and sizes, even single family homes for rent, but owning or manage these buildings. And we’ll work with brokers and we’ll pay you a commission. And in addition to getting the commission, it’s because it’s not on the MLS there is no listing broker, there’s no cooperative broker, right? It’s just while you’re the CO operative broker, so you would get in most cases, these buildings, these management companies do pay out one month’s rent, so you’re not splitting it as you would be on the MLS. Right. So how do you get access to these listings? Well, what I would do is first get some clients that are looking for apartments, and then whatever neighborhoods they’re looking into, if it’s in the city, look for the big high rises, that would be the easiest way to go. If it’s an area of the city where there are high rises and call those management companies and ask them well, first thing I would do is ask your managing broker, if you have relationships with these management companies, likely they do if they don’t, you can call these buildings directly and say, Hey, I’m a broker, I have a client that’s interested in you know, a unit in your in your building, do you pay a commission, if I bring you the broker, or sorry, bring you the renter, and you will find out that traditionally, they usually pay one month’s rent, sometimes even in the off months, they might even pay one and a half times rent, right. So it’s a, it’s certainly not a bad way to stay busy. And also, renters become buyers, as we know. So if you aren’t familiar with this, we’ll call it a non MLS database. Again, you could just look for the big management companies that manage properties or own buildings, or both in the areas that your clients are looking at. And contact those management companies and ask and you will be shocked. The vast majority of them do work with brokers. And you can ask to be put on there. We call it hot sheets. But basically, it’s their availability lists because since it’s not on the MLS, they usually email out their availability every so often. So just call a few of these buildings. And there you have a bigger database than just the MLS. So I don’t know, Carrie, if you’ve ever used management companies for rentals, but I have
Carrie McCormick 9:01
I have done that. And my tip to the brokers that are listening is since you’re dealing with the management companies or their you know, the corporate offices, you do there’s a little more paperwork on the getting paid side and you do have to follow up with them quite extensively on that front. So it’s a it’s a great tip, just you got to keep after him a little bit. So yeah, my experience
D.J. Paris 9:28
carries, right and so that what she’s mentioning is getting paid. So once the you know, the renter signs the lease, you know, in a traditional MLS transaction, you get paid pretty quickly. Sometimes with these management companies, since it’s anonymous transaction, your your office, your managing broker will or whoever works, your office will send an invoice to these companies and it’s essentially a build for them to pay. So be prepared to wait. That’s the downside is that sometimes you get paid, you know, within a few weeks, sometimes you don’t. And that’s just unfortunately the nature of working with management companies. So that is definitely a downside. So you’re not going to get it as quickly most most of the time, but hopefully you will get it. You’ll get it. Yeah, but you will get it. Well, Carrie and I wanted to thank everyone for listening over the last year and beyond. And we’re so excited to continue the show. Happy holidays to Carrie Carrie, to you and to all the listeners.
Carrie McCormick 10:19
Yes, everyone. Happy holidays. And thank you DJ for such a wonderful year and having me on your show. You do so much for our community and I just want to thank you and of course thank everyone who listens.
D.J. Paris 10:31
Well thank you and we will see you guys in 2019 and we’re excited to bring you more tips and tricks and tell you more about the market.
Carrie McCormick 10:39
Happy selling and happy holidays.