An Interview with J. Lucky Henry, Boston’s #1 Video Marketing Real Estate Agent
By Ritu Khanna
With so much of our business based in Boston, we wanted to get a sense of how supply and demand for real estate there has been affected by the pandemic. Who better to speak with than J. Lucky Henry? Author of Switch Gears and lead of the Boston Young Investor Network, Lucky always has his finger on the pulse of the market.
The Stay-at-Home advisory began in Massachusetts on March 24. What immediate measures did you take to ensure the safety of your clients, while still continuing to operate? How has your business changed?
Outside of everyone wearing masks, not much. The six feet apart guidance is kind of helping create scarcity for sellers, and is definitely a win. With open houses banned, what you have now is basically like a caravan of people coming through. So you have 10-12 cars parked outside, and they have 10-15 minute slots to come see the apartment / house / whatever you are selling. I say get here at noon, I assign you a number, and we’re going in slots because I want you to see how many other people are there. I want you to know that if you don’t act, someone else will. In some ways it’s kind of better than the open house, because in the open house people are running around and you may hear someone else say “I don’t like this,” or “I don’t like that,” or “this is overpriced.” You know that that can damage the sale. But when you have these people in their car, they don’t know what anyone else is thinking. They just see people go in, they see people go out.
I wrote this book last year called Switch Gears, which is about how to reintroduce your property to market. Really it was about taking advantage of new opportunities we have to market globally using social media. And now I’m realizing that all the things that I was talking about doing then are what everyone is forced to do now. Everyone is forced to do more creative videos. Everyone is doing a video walk through right now. Because a property that gets seen is going to get sold, if everything else is the same (conditions are same, it is priced appropriately, etc.) Those measures that were there already, like 3D tours, have been around, it’s just that agents weren’t using them.
Switch Gears was born because people aren’t looking at your property if you’ve been on the market for a long time . . . which happens now since COVID-19 started spreading. So how do you prevent people from saying “oh my house has been on the market for 100 days, something must be wrong with it”? You leverage digital media and market the house, without keeping track of the days on market. So if it’s on Zillow or MLS, the days on market accrue. But if you’re running Facebook ads, Google ads, and YouTube videos, you can market for a long time without the days on market accruing, and build a big strong buyer list for when you actually do launch on market. So that’s how I’m thinking about repositioning and taking advantage of this opportunity. It’s definitely a crisis and there definitely are things that are negative about it, but there’s also opportunity to be had, and opportunities to explore that we’ve had but kind of took for granted before.
What skills did you have to learn to make your business more digital?
That’s the gold question. That’s literally one of the things that sets me apart from other agents and why I get hired, even in some cases when I’m the less experienced agent. It’s because . . . and I outline this in the book . . . you have to create a buyer profile. You have to understand who is going to buy this house based on the neighborhood, how big it is, amenities, etc. Once you identify who the buyer is, you go on to targeting them where they’re at.
I’ll give you an example. Let’s say you have a one bedroom condo in the financial district that’s $2 million. That’s a 1-2 person household, they have a solid income, and they most likely work somewhere in the area. Where are they spending their time?
My four platforms are Facebook, Google, Instagram, and LinkedIn. Why? Because on Facebook you can market based on interests. Once you understand who this person is and what interests they have – now, there’s no perfection, it’s an art, not a science – but you have to figure out what kind of things a person like that is interested in. Then you have to use LinkedIn to target based on occupation. So you start targeting people who work at the companies around that condo, and that have positions that would make enough to qualify for that condo. Then you can use Instagram to target based on geolocation. Who lives around here? And use YouTube and Google. With Google it’s search-based. If someone types in “homes for sale,” “Back Bay homes for sale,” “Financial District,” you use Google to attract people who are searching for things that are similar to what you might have.
That’s going based on someone’s wants, but you can also go about it based on someone’s needs. If you want the ideal buyer for a 5-bedroom, 4-bathroom house in Newton, you know that might be someone with a family. That’s a larger household. So what else does someone like that need? They might need minivans. So if you target based on people searching for minivans, that’s not a guarantee your hit is looking for a house, but at least you know you’re looking at the right demographic and they might know someone who is looking for a house.
So there’s kind of the direct marketing, or there’s cross-promotional marketing, and I use these four platforms to market and get the message in front of the right people.
Do you believe that any of these changes will last after the pandemic is over, if so for how long? Do you think any might become permanent?
For me, they are definitely going to last. Like I said, I was doing them before COVID-19 happened, and now COVID-19 is just making it more effective for me. I hope some of these changes last, and not just digital marketing. I did go to school for advertising and digital marketing, so I do have a leg up in that sense and I lean on that because being younger, I don’t have 30 years of experience. I’m only 30 years old, so I lean on my expertise in that aspect.
It’s almost impossible right now to put up a listing and not have a 3D tour on it, because a lot of people don’t want to go into properties, and a lot of sellers don’t want people in their property. 3D tools have been around for 2-3 years, but now every listing has it. When this is over, it’s probably going to be expected that everything listing has it. It should be expected. For the buyers, they should expect from the listing agents that there’s detailed information and an opportunity to see stuff.
Do you see more people trying to take advantage of lower interest rates?
Yes, first time home buyers are still looking to capitalize on favorable rates. It’s interesting because the lower interest has people wanting to buy more, but there’s also less on the market because sellers don’t want people in their house. If you have more buyers and less sellers, it’s a seller’s market. So that drives the price up, which can almost negate the advantage of having a better interest rate.
Have you seen banks tighten credit requirements, and has that been impacting how people select homes?
Absolutely. We see it with some clients we were working with on building up their credit to get them to like a 580. Now they have to get to a 620 for some of those programs. That is discouraging for some people who had really bad credit, whatever the reason is, and they’ve been working on it.
How people select which home they buy is obviously still based on value. An actual example in the Boston market: a house priced at $630,000 sat for two months. A very comparable home came on the market within 5% of the same square footage, same bed, same bath, similar condition, and it was at $600,000. It got an offer in 3 days. They are like 2-3 minutes apart from each other. It’s still about perceived value. $30,000 less on a $600,000 home is a good enough deal that that one flies off the shelf and the first one doesn’t. You still see people selecting homes based on value, no matter how loose the credit or how low the interest rates are. If they feel the house is overpriced, they still won’t take it because with less inventory, if you are overpriced, it shows, because there are less homes on the market.
Any other changes besides the credit score?
For multifamilies, some banks have been requiring more reserves. That can be tough for first-time home buyers buying a multifamily. Every day it seems to be changing, so by the time this is posted there may be even more changes that we didn’t even know about today.
As an agent, I feel like you feel this pressure the most – because the seller will blame you if the house doesn’t sell!
That’s OK because that’s what the job is. At the end of the day, the seller has to decide what price they want to go on. As an agent, it’s also your choice if you’re going to take the listing. At the end of the day we’re salespeople and negotiators. If the transaction starts off with you not being able to negotiate and communicate well with the person on your side, how well of a job can you do negotiating with the person on the other side?
Are banks still servicing new mortgages, or is there a slowdown in service because of PPP?
Depends on who you ask. Some realtors will tell you nothing is selling and the market sucks. Others like me will tell you it’s hot and we’re super active. I know loan servicers who have packed it up and won’t work, because they think it’s the end of the world. There are others who are killing it, because they’re on top of changes in the market. They’re active on social media and being a resource for people. You won’t even know we’re in the midst of a pandemic with the right professionals. Their service is uninterrupted. Especially as we can do so much virtually.
I find it’s always important how you treat people and the service you provide. In a time like this when anything can happen and it’s out of your control . . . you can be pre-approved, and everything could be good to go, and right before the close . . . you lose your job. Or something crazy happens. Or the bank changes its guidelines. That’s out of the control of you and the loan officer. But the only thing people are going to remember is how you made them feel with the service you provided. So they might be upset in the moment, but if everything you did was be a resource and be helpful and be respectful and be of service, then they will remember that. People who get that are providing top notch, even better service than they would normally because they know that anything could go wrong at this moment.
The equity markets are back to black. Is that what you are seeing in real estate as well? What factors contribute to sellers or buyers commanding power in the market?
The prices haven’t dropped yet. I say yet because we don’t know what’s going to happen. But as of right now, year over year, in April, the prices have actually gone up. If you look at the data in Boston, 43 single families sold in April 2019. This year, 43 single families sold in April. The price per square foot seems to have gone up by $30 for single families, condos, and multifamilies. So in all 3 sectors, based on MLS stats. Single families went from $411,000 to $443,000. Condominiums went from $692,000 to $718,000, and multifamilies went from $651,000 to $687,000.
Even more interesting, the average size of multifamilies sold went down. So the actual average price of the multifamilies went down by ~$150,000, but the price per square foot went up. Maybe more two-families vs. three-families. But prices haven’t dropped yet. The buyers who are active have less choices, so the sellers can command the higher price. Inventory is the thing to watch every month.
I run the Boston Young Investor Network, so can explain it for the newbies in your audience. Inventory and supply are interchangeable words in real estate. At the end of the month, you look at how many properties are still available for sale. You can do this on a macro level (all of Boston), or you can do this on a micro level (just single families), or you can do it at an extra micro level (just luxury single families). Let’s say we’re doing it on single families that are 4-bedroom / 2-bath at the end of the month . . . we have 8 on the market right now. OK. How many sold in the last 12 months? 48 have sold in the last 12 months . . . that’s about 4 per month. If we have 8 on the market right now and no new ones came on the market, it would take about 2 months to sell what we have. If you look at inventory like that, is two months good or bad? Neither. Two months just means we’re in a seller’s market, give or take. Anything below 5 kinda tends to be a seller’s market, 7 and up tends to be a buyer’s market, and 6 is kind of that happy medium, a neutral market. So when you look at Boston as a whole, we’re totally in a seller’s market right now.
When you look at super niche areas, like ultra-luxury condos above the $5 million mark, maybe those are in a more neutral market, but Boston as a whole is a seller’s market.
What are the hottest neighborhoods right now? Do people want to stay in central Boston or are the suburbs more attractive?
On the one hand, I say no matter where in Boston you pick, you can’t go wrong. If there is a T or a college nearby, even better. On the other hand, everything we think we know about buyers, what buyers want, should be thrown away and we should start over. Because we don’t know what they’re going to come out thinking after this pandemic. If you’re a baby boomer couple with a 3,000 square foot home and mobility is limited, it just became really apparent that 3,000 square feet with a yard is too much. You don’t want it anymore after this. That’s a lot of shift right there. Where do they want to go? And who wants to buy that house right now? Better question, who can afford to buy a house right now? Baby boomers are a large generation. Gen X is not as large.
Then you have the segment of people who live in condominium buildings right now who are kind of trapped. They are concerned if one person in the building gets it and they are going up and down in the elevator, there is a higher risk of contamination.
These aren’t absolutes for me, they are just questions. Are baby boomers going to want to keep those houses? Are people still going to want to live in condominium buildings? We don’t know. Maybe we come out of this and things just go back to normal, and people forget about it and move on. We do have short-term memories as humans. We do tend to move past things.
But maybe we don’t. Maybe for the next year or two, it’s kind of weird. And – this one is an absolute – a lot of people are waiting for the “market to crash” so they can buy. What they are not realizing is two things: One, banks are risk averse. Banks are not in the business of high risk loans. If the market is crashing, and houses that are worth $500,000 are worth 10% less (which by the way in Boston only dropped about 11% in the last economic crisis) . . . so even if we went down 20% this time and we’re sliding down, the bank isn’t giving loans on a property that’s worth $500,000 today and $480,000 tomorrow, and might be worth $460,000 in a couple years. They’re not lending on properties that are going down in value. They’re trying to protect their bottom line, so cash becomes king. So if you’re waiting – and I say this to my fellow millennials who are waiting, and they can finally afford to get in the game – if they have cash in the bank, absolutely. If you don’t have the cash, a potential crash isn’t really going to be as beneficial as you think, because you won’t be able to get the loan on the house for the value the seller is trying to sell it for.
The second thing is, the drop isn’t as big as they think it is. So if you’re planning on buying for the long-term, your forever home, just buy it. Because you’re going to be in it forever. And because of the cyclical nature of real estate, the price will come back up, especially in a market like Boston. You’ll be fine on the back end.
If you’re looking at the short-term, if you’re interested in flipping, this is an interesting time. Unless you find deeply discounted properties, you’re not sure where that slide is going to go, and where you’re going to end up on the scale, so it’s kind of tough.
Is there more demand for any particular types of real estate over another (single family homes, warehouses, investors looking to flip, etc.)?
Distressed real estate is always the number one option for investors – whether it’s single or multi. Any distressed real estate at the right price can be a fruitful deal for an experienced investor who knows multiple exit strategies. A lot of investors are on the sideline. Those I do run into have shown greater interest than previous times in the government subsidized class and the luxury class, because those two classes are less likely to be disrupted in this pandemic. The real estate at a really high price point – the [owners] have the ability to work from home, they might be retained on their salary, or they might run the company. Those who play in the middle class are kind of sitting on the sideline right now because their market is sitting on the sideline. The middle of the road, first-time home buyer is sitting on the sideline, so those investors are kind of waiting it out as well.
What is your main clientele? (First time home buyers, investors, commercial businesses, etc.)
Boston is a condo city. They provide the ultimate freedom and are maintenance free. Last year there was a 2 bedroom condo that sold for $7,000,000, and I just sold a 2 bedroom condo for $360,000 a couple months ago. It’s such a beautiful range of properties. Condos are where I make my bread and butter, from investment condos to luxury condos, and multifamilies that can be converted as well.
Sadly, we continue to see businesses that fold. What opportunity do you see for the real estate previously used for small businesses including local retail stores and restaurants?
Boston is a strong city, and it will bounce back. That’s just a fact. Businesses will adapt more. There’s a lot of take out happening. I have a friend who runs a bakery who is clearing serious dough right now because she’s one of the only people open. But for the people who aren’t open, they’ll get creative. Some of the businesses will come back and expand into the business next door, because that one had to close its doors. Some businesses can expand and have more space, so people can still be six feet apart.
We still have a bit of a housing shortage, so some real estate can definitely be re-zoned and turned into condos. Businesses are definitely going to move online.
One of the best pizza spots ever – in 2012, he had a place that you couldn’t fit 10 people in the lobby entrance if you wanted to. It was tiny. You came in, got your pizza, and left. People would line up outside in their cars to get the text that their food was ready. More places are going to do that. You can’t be everything for everybody. Get really small, barrel in, and focus on those take out orders and online orders. Places that are made for sitting down will have to be a lot bigger. People still want the experience, but they’re not going to want to be on top of each other. Date night’s gotta happen. Places that have the opportunity to eat outside will still do well – it’s better than being a trapped room.
You can watch some of Lucky’s YouTube videos for more insights on the Boston market.
For help on the financing side, please contact us at 617-606-3413.
The views and opinions expressed in this interview are those of J. Lucky Henry, and do not necessarily reflect the position of RD Advisors LLC.
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