By Julie Harris

Taking a break from our routine, today was a very interesting day as most of you know, as the Feds did a surprise rate cut of three-quarters of a point.  A lot of people are saying there will also be a quarter point next week for a total of an entire point rate cut, which is very significant.

How does this affect you?  Guess what, this is going to stimulate many of your buyers to finally do something.  One of the most common things heard in coaching calls is that I have a buyer that’s interested, but they’re waiting on prices to come down, rates to come down but we are there.

There are two ways for you to use this information. 

Number one call all your sellers and talk to them about the fact that the buyers in the market are finally being stimulated, especially on the five, seven and ten year arms.  For example, these are the lowest rates in years.  On a conforming, which in most states is up to $417,000 in loan, the five year is 5.1%. 

Therefore, you should call and be relentless in doing follow-up with all buyer leads, open-house leads, sign calls, Internet leads whatever the case may be, call it today. 

You can check rates in several places such as CNBC, BankRate.com; on a jumbo rate over $417,000, five year is 5.8 and the ten year is 6.5% and these are as low as they’ve been in years.  Combine that with the fact there are many homes for the buyers to look at.

Sellers are finally adjusting prices and low interest rates that’s buyer nirvana, which is why they call it a buyer’s market.  It’s your job to call all possible buyer leads you have right now and get them into a house in the next week.

The second way you can do this is to call your sellers and make sure they know all these facts.  Remind them that this is a unique situation.  They can have their house positioned properly as we’ve talked about on previous calls, it’s got to show in the best condition possible and be at the most competitive price. 

Competitive price, great condition, motivated buyers; finally motivated buyers equals more sales for you and happy sellers.

Pay attention to what’s happening around you, the agents who know what’s happening and take advantage of the opportunities will win every time.  In this situation you can win big. 

Call the buyers who told you last November they were waiting until the first of the year until prices came down.  This is a situation where they can afford more house for the money and they have plenty to choose from.  When the market was hot there wasn’t much to choose from, rates were good, but they didn’t have choices.  Call those people because now is their time.

By Tim Harris

We’re talking about the action plan to get your listings sold in this market. Make sure you’re taking great notes and as the name implies it’s an action plan, so take action.

The next point I wrote down for the week is working the showing agents. In this case, because I’m assuming you have some listings, don’t wait around for the buyer’s agents to do your job for you. If you’re a bubble agent, someone who’s only sold real estate in the hot sellers market then you’ve never had to work the other agents and now you do. In the old market you put it in a list and waited for the offers to come flying in, but it doesn’t work that way anymore.

When you have a showing and showings are hard enough to get, but when you do have a showing on one of your listings, you have to call the other agent and ask them these three questions.

1. Did the buyer like the house? 
2. Did the buyer have any interest in the house whatsoever?
3. Is the buyer considering any other house and making an offer in any other listing? How close are they to making an offer on a listing?

What do you (seller or listing agent) have to do to get the offer to come in on your listing? In other words, is the buyer looking for special financing incentives as we discussed earlier? Is the buyer looking for new carpet, the house to be painted a different color? In this market it doesn’t matter, whatever the buyer wants the buyer gets.

Nine times out of ten when we’re in a market like this your job at this point is to get the offer that’s what the seller expects. That’s what you’re supposed to do, any offer is the starting point to getting a contract together.

When you know you have a showing coming up on one of your listings, by all means, call that other agent and get them motivated about your house by telling them all the features and benefits. Let them know it’s a great house, probably a perfect fit for their buyers, do whatever it takes to get that house sold.  When you get a showing do whatever it takes to make it so that showing results in an offer.

By Julie Harris

Yesterday, the discussion was about how to go into a listing presentation fully prepared to discuss price in such a way that you’ll price it correctly in the first place. 

One of the most common questions that you’re sending all the coaches, you’re doing a great job in thinking about how you’re going to thrive in this market. 

One of the most popular questions is, now that I can take listings, after all we can all get listings now. 

• What am I going to do?
• How do I get rid of these things?
• How am I supposed to help all sellers that I have in inventory, accomplish their goals?  How can I do this? 
• How can I escape having a six or eighteen-month long listing period? 

It doesn’t mean because there’s a supply things have to take that long.  Our expectation is that you study what’s going on and you figure out how to beat the market. 

• How to sell my properties in less time than the normal marketing time for the neighborhood? 

Beyond everything else you’re doing it comes down to price; price will overcome location, condition, sellers bad attitude sometimes and bad curb appeal.  Once you price it correctly, anything will sell.  It’s impossible to give a home away at a certain point you get multiple offers, even in a market like this. 

The next thing you must know is the sellers motivation, so write this down.

• Low-sellers motivation.  In other words, they don’t care if it sells or not equals an unsold listing and a recipe of frustration for you, you might as well not take it. 
• High sellers motivation.  In other words, they have to sell the home equals a sale for you after you’ve properly priced it.

Those sellers are more willing to let you price it correctly.  In fact, several stories this week say, “I took an expired listing this week and the seller said the listing agent wouldn’t let them reduce the price.”  The agent argued with them about lowering the price.  Motivated sellers want it gone, sold and they will allow you to price it correctly so be careful who you’re listing.

• Set realistic expectations of the price and the time on the market with the sellers.  Write down, stubborn sellers don’t sell.   
• Next, you must be in the top three active homes, which means homes in best condition, best price; location you can’t control, but you can overcome that with price. 
• Next on the list, if there is any sort of location issue you must lower the price to the point where a buyer will rationalize their getting more home for the money. 

For example, if there isn’t a location issue it would bring $300,000 to your market.  If the next neighborhood down, which has smaller with older homes sells for $250,000 you should price closer to that other neighborhood.

Remember yesterday, agents who study and understand not only thrive, but survive. 

Learn personally how to stage a house.  Not every seller can write a check for $5,000 to stage a home.  De-clutter, show off the counter space, show off closet space, clean everything, replacing appliances…

We get many question from agents about what effects the Feds lowering of the rates has on mortgage rates.
Here are the answers:

The 30-year fixed: not much. The 30-year fixed is not tied to short-term treasuries. Fixed mortgage rates are tied to long-term bond yields that move based on the outlook for the economy and inflation. True, even as the Fed has lowered rates, the 30-year fixed has come down, but that’s because of the outlook for slower economic growth in the months ahead. While the decline in treasury yields has helped push mortgage rates lower, the decline in long term rates hasn’t been in lockstep thanks to the fact that these mortgages are securitized and sold on the global market. Investors now demand a higher risk premium on these mortgages due to higher delinquencies and foreclosures.

5-1 ARMs: Yes, this is good news if your 5-year ARM is pegged to a treasury index. The one-year treasury is a common index for many adjustable rate loans, and it has plummeted from 5 percent in July down to now about 3.00 percent. So if you’re facing a reset on, say, a $200,000 loan, you’re now getting a payment increase of about $150 a month, as opposed to $370 a month, which you would have had before the Fed started cutting rates.

Subprimers: Nope. Unfortunately if you have a subprime ARM it is more than likely pegged to LIBOR, which has moved in the opposite direction. Because of the liquidity issues in global financial markets, LIBOR rates have actually increased at the same time that treasury and other benchmark yields have been declining, so the Fed lowering rates today would not help too many subprimers.

HELOC: Yes, if you have that home equity line of credit that you used to renovate your bathroom/kitchen recently, then when the Fed lowers rates, your rate comes down as well. That’s because HELOCs are predominantly pegged to the prime rate, which moves in step with the Federal Reserve. The cumulative effect of the Fed’s interest rate cuts have taken the average home equity line of credit from 8.25 percent now down to about 7.5 percent and going lower. With an additional rate cut, that will fall lower.

Price – Condition – Location - Terms

By Tim Harris

Today’s message, we’ve talked about the 100 days to greatness plan. For those of you listening to this message for the first time or for those of you who have been listening, but haven’t started on the plan yet, you can download the plan from the website in the events section. It’s a plan designed to keep you in action for the next 100 days.

What we’re going to be focusing on is getting your listing sold. I think I’m talking about point three today. Price-condition-location, everyone knows those are the three basic elements that make up a successful home sale.  In this market there needs to be more than just great price, great location and great condition, because as many of you are learning, even when a house is priced perfectly, it often won’t sell right away. 

Price, condition and location is obviously important, but now its price, condition, location and terms. The builders know this, which is why they’re selling so many more houses compared to resale. What they’re doing is offering financial incentives to the buyer that resell sellers simply think they can’t offer so they aren’t offering.

Do what the builders do, in Las Vegas it’s working for them they’re selling almost three times as many homes as re-sales are selling.  Talk with the seller. Have the seller set aside at list price $10,000 to buy down the interest rate of the buyer’s potential mortgage.

In the MLS, on any brochures you do, in any ads, on the Internet, to other realtors, directly to all your buyers.  Let them know about the house and the payment that’s how you get inventory and listings sold in this marketplace and don’t be afraid to advertise it.

Obviously you want to disclose any place that’s necessary with any laws required in your particular area, making sure you’re putting all the terms and conditions of the mortgage that’s how you get listings sold in this market. Be aggressive. Advertise and market the price.

By Julie Harris

One of the most commonly asked questions has to do with pricing in today’s market.  It used to be, when things were hot you could price it wherever you wanted to.  You thought it was 10% over price and it would still sell by tomorrow.  Obviously, those days are over for nearly everyone in the country.

• How do you price a home in today’s market?

Even more important than that, how do you price it so well that you don’t have to do four or five price reductions before you get it sold?  We all hate doing price reduction calls.  There are scripts you can get so you know how to do them properly, but how are you going to avoid having to do multiple ones and how can you get out of doing it at all by selling the house quickly?

What made me think of this was an article I read in a scientific magazine.  It’s talking about how cells survive in different environments.  “There is an information minimum for life and evolution favors organisms that know more about their environment.”

I read that and thought about how that’s just like winning, listing presentations and pricing things properly.  Our agent’s that thrive are just like those cells and it’s because they know more.  It’s because they understand more and they took more time.  The article went on to say this suggests that there’s “an information minimum for life that natural selection favors organisms that capture more information about their environment.”

• How does this apply to you?

Before you go to any listing presentation make sure you know this:

• What’s the sellers motivation? 

You and I both know, if the seller isn’t motivated they won’t allow you to price it right.  It’s the same thing, an over=priced listing equals a non-motivated seller.  Then, the next thing for you to ask and for you to know before you show up is this. 

• Are prices going up or down in that particular neighborhood over the past 90 days?

In most cases, you’re going to find out prices are going down.  By how much?  How do you find this out?  Look at the comps you have to find anyway.  Are prices going up or down? 

• How many active homes are competing with this particular property and how long have they been on the market?

If all your competition has been on the market for 120 days don’t let the seller believe their home will sell in the next seven that doesn’t make any sense.  You’re going to have a lot happier sellers if you tell them what to expect. 

Mr and Mrs. Seller, based on the fact that your competition has already been on the market for 120 days and based on the fact that the three best comps we found all took more than 120 days to sell; I would expect your home to sell in the next four to five months minimum, but it could take longer since the trend we’re seeing is longer days on the market and a lower price as opposed to saying, we’ll see what happens, which is what most agent’s do.

• What is the average day on the market for the three to five comparable’s that have actually sold?

So you have how long your competition’s been out there and how long have the sold comps taken to sell?  Concentrate on the past 90 days since things are changing quickly in our real estate markets.

This is different for everyone.  You should know what the factors are effecting sales.  For example, is there new construction in the area where the sellers are buying down the rate and paying closing costs? 

If you’re listing something for $200,000 and there is a $300,000 new construction home where the seller is buying down the rate, paying for upgrades and building a deck in the backyard then your house will be killed by that $300,000 new construction, because the payment will be the same for the buyer.

You should know these things.  Are the taxes going up?  One of my great coaching clients in Vermont sells in an area where taxes have been approved that are dramatically effecting the sales of some of her areas.  People know their taxes are going to skyrocket and it’s affecting certain areas.

What about companies moving in and out.  Are companies laying off a lot of people?  Many people in the Detroit area are constantly dealing with this.  There are more people losing their jobs than gaining jobs.  People in the up-state New York area, they have people moving into the area for a lot tech jobs, which can affect pricing.

So just like the article I was reading where it says, from their research on forms of life, it seems to me something can be alive in every sense you’d have no inkling of it’s environment.  They were comparing cells that do nothing to further themselves and gather information versus the cells that survive and thrive, so we have to be just like that.

We’re alive too and if you want to be alive in this real estate market you have to know your stuff going into that listing.  You should all know these things before you show up.