Return of the “zombie” properties

Plus, where have all the agents gone?

June 04, 2024

Staying in the game

A recent article in the Washington Post definitely caught our attention. It reported that the number of full-time real estate agents nationwide dropped by 72,000 last year.

Now, we’re not too surprised by this number. With the market still trying to get back to normal after the wild pandemic spree, and all the recent changes to the business, we would expect this to affect the number of agents working in our business.

But it is a reminder that this industry can be downright challenging at times. In today’s Foundation Plans, we give some of our best pointers for keeping your head in the game even when this industry gets rough.

On that note, we do have several stories about where real estate deals are happening. In our second story, we list the best buyer’s markets in the country. In our third story, we show you where you and your clients can take advantage of zombie foreclosures.

And with that, let’s get on with today’s Blueprint!

– James and David

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Home sellers cut prices at biggest rate since 2022

Source: Unsplash

In May, 6.4% of home sellers nationwide cut their asking price, the highest share since November 2022, according to Redfin’s latest update. This is due to plunging buyer demand and doggedly high mortgage rates. Here’s more key data:

In the last week of May, the median asking price dropped about $3,000 to $416,623, the first decline in six months.
The number of days active listings have been on the market increased for the first time in 8 months (The median number is now 46 days).
Pending sales are down 3.4% year-over-year

Our take

As we noted last week, high borrowing costs are causing home buyers to get cold feet. The 30-year fixed mortgage spiked past 7% in the last week of May, and most forecasters don’t see it dropping anytime soon. We do expect housing to become more affordable in the coming months when more inventory makes its way to market and borrowing costs ease. But right now, buyers and their agents are in a bit of a rough patch.

Top buyer’s markets in the country

Source: Unsplash

Realtor.com has compiled a list of the top buyer’s markets in the country. The company based the list on low sale-to-listing price ratio – i.e. areas with homes selling for the lowest price relative to their initial listing price. Homes in these markets sell for about 9% less than the initial listing price on average.

Here are the top buyer’s markets in the nation:

Our take

This is a great example of what we often discuss in this newsletter – national trends don’t tell the whole story. There are still some pockets where buyers can score a good deal. Even more surprisingly, many of these markets are in desirable locales such as the Sun Belt. However, we should note that prices are not necessarily lower in these buyer’s markets. This just means that sellers in these areas are more eager to either lower their asking price or offer concessions such as a mortgage rate buy-down to sweeten the deal.

Top zip codes with the highest zombie foreclosure rates

Source: Unsplash

An increasing number of real estate investors are looking to use vacant and zombie properties as potential cash flow streams. Since housing inventory is low, developers and flippers are refurbishing older properties and selling them or using them as rentals.

For reference: a “zombie property” is a home that is deemed vacant and currently in the foreclosure process. A zombie home has a mortgage lien in foreclosure but is neither lien-free nor fully foreclosed. A vacant property, by contrast, is an unoccupied home, whether due to abandonment or death.

According to ATTOM’s latest Zombie Foreclosure report, here are the top 10 zip codes with the highest zombie foreclosure rates.

Our take

This report is a goldmine for investors and flippers. It could help them pick up a property well below market value and turn it around for a good profit. Take advantage of single-family homes that need refurbishment. Just be sure you have the available resources and a competent team in place, and make sure to cushion your budget to cover any unforeseen events that might derail your project timeline.

Schematics

The news that just missed the cut

Riding scooters by the Sacramento River on the Tower Bridge overpass walkway.

Source: Unsplash

Housing affordability is Gen Z’s top voting issue beating other common ones
Commission-sharing sites are popping up everywhere
The clock is ticking, what you need to know about ARM mortgages right now
Bright MLS is offering expanded concession fields
How to dominate your farm and conquer objections like a pro

Foundation Plans

Advice from James and David to win the day

Last week, the Washington Post reported that real estate agents are leaving the industry in droves. Since last year, the number of full-time agents dropped by 72,000. NAR anticipates declines in Realtor membership for the next 24 months. While these stats don’t surprise us, we are saddened by them. Today, we’d like to offer you some advice and tips on the mentality you need to thrive, or just survive, in our business:

Don’t assume success comes easy – There’s a lot of rejection on the road to being a successful agent. You have to get out there, knock on doors, and generate leads. Successful agents know that every “no” is a potential “yes” in the future. Your success depends on how hard you’re willing to work for it, and how much rejection you’re willing to take.

Don’t think of real estate as your “backup” plan – This business requires a full commitment. You have to plan, network, grind, and most importantly, compete against others who are hungry for success too. You’ve got to put in more work than the next agent. Treat your real estate business like a career instead of a hobby, and you’ll be on your way to closing deals.

Don’t just stick to your personal network – Your personal connections are definitely important, but as a new agent, you’ve got to branch out. Networking, using referrals, lead generators, expired listings, social media, and (of course) door-knocking are just some of the most important things a new agent can do to generate new opportunities and expand their list of potential clients! Not only do you need to get out there and make connections, you need to do it consistently.

Don’t get down on yourself – Real estate, like sports, is 90% mental. There is nothing more important than the mentality you bring to your business. If you don’t have the right approach, everything else will fall by the wayside. Nothing in life is guaranteed and being an agent isn’t easy, but we think if you avoid the common mistakes we’ve identified above, and keep a positive mindset, you’ll definitely increase the chances of your success.

There is no reason to reinvent the wheel. Learn from the experience of other seasoned brokers. Learn what to do, as well as what NOT to do. Start here and here.