With interest rates on an upward trajectory, now is the time to discuss the logic and timing of homebuying with your potential buyers.
The 2021 housing market = off-the-charts buyer demand coupled with knock-out, drag-out bidding wars, nose-bleed home prices, rock-bottom interest rates and scant inventory.
The 2022 housing market = fast climbing interest rates and four-decade high inflation coupled with less buyer demand, fewer bidding wars, slower growth in home prices and slight uptick in inventory.
An important question for you. Spring 2022 is here…have you completed your 2022 Real Estate Business and Lead Generation Plan? If not, no worries. We have done the hard work for you. Download your 2022 REAL ESTATE TREASURE MAP! Text HARRIS to 47372. It’s that simple and takes 3 seconds. Text HARRIS to 47372 and when you do we will instantly text you back with a link to download. BONUS: For a limited time when you text HARRIS to 47372 you will also receive a Coaching Call!
4 Msgs/Month. Reply STOP to cancel, HELP for help. Msg&data rates may apply. Terms & Privacy: slkt.io/JWQt
Tips for Discussions with Hesitant Buyers
Here are some tips for agents to consider when talking about this market shift with your potential, much more apprehensive homebuyers.
- With potential buyers who are “going to wait for lower interest rates,” agents may want to offer wannabe buyers an historical perspective on interest rates. Using data from Freddie Mac mortgage rate tracking since 1971, the average interest rate over the last 50 years comes in just a breath below 8%. The historically low interest rates of the past few years are essentially aberrations caused by a global pandemic and the subsequent global economic collapse. As the economy here and abroad normalizes, interest rates will also normalize to historic averages. Potential buyers who are waiting for lower interest rates comparable to rates seen in the last two-three years may be waiting for decades. The upshot – savvy buyers would do well to lock in rates sooner rather than later as the Federal Reserve continues to slow our current inflationary economy by raising rates.
- For wannabe buyers who are “going to wait for prices to come down,” agents may want to discuss the reality that inventory will not increase enough to compensate for projected interest rate increases. Agents may also want to discuss the reality that the amount of the monthly mortgage payment is the most important number for homebuyers to consider, not the purchase price of any house. Agents may want to discuss with wannabe buyers the fact that getting into the housing market by owning a home, likely the single largest investment of their lives, is the largest contributor to their wealth. Agents may want to mention that owning real estate is considered the safest and most beneficial long-term investment. Agents may want to mention the tax advantages of owning a home. Agents may also want to mention that homeowners, according to the Federal Reserve, have a net worth 40 times greater than the average renter. The upshot – savvy wannabe buyers know the only thing that matters here is the ability of the homeowner to make the monthly mortgage payment.
- For wannabe buyers who are “going to make lowball offers,” agents might mention that most sellers are aware the market has shifted and that if they wait long enough, they will likely receive a common sense, equitable offer on their for-sale home.
- For wannabe buyers who are “going to sit it out with their rental,” agents might want to mention that renters will pay for increased costs to landlords due to higher labor and maintenance costs, higher property taxes that are sure to come and higher operating costs via higher rents. Renters will also pay for higher rents as landlords look to cash in on their increased property values by selling their properties to other landlords/buyers…those new owners will raise rents to help them pay for their new, and more expensive rental property. And agents may, most importantly, want to mention that the longer the wannabe buyer rents, the longer that wannabe buyer will NOT be generating their own wealth as a homeowner.
- For wannabe buyers who are saying, “I can’t afford the house I want,” or “I can’t afford to buy in my local market,” agents might want to mention that the most important thing a wannabe buyer can do is to buy whatever house and wherever that house is to take advantage of the tax benefits homeownership offers and to begin generating wealth via homeownership. As long as a wannabe buyer can afford the monthly mortgage payment, homeownership makes financial sense in any housing market.
URGENT: Are You Worried About Having A Slower Start To The Year? Don’t Hit The Panic Button, Learn How To Have Massive Success In A Shifting Market. When You Attend This Exclusive Training You Will Learn 17 Surprising Secrets Of The Top 100 $ Millionaire Agents. Claim Your FREE Spot Now. After You Have Attended This Event You Will Experience A Huge Feeling Of Relief Knowing You Will FINALLY Laugh At Your Money Worries – You Will Have Your Own Personalized 2022 Step-By-Step Business And Lead Generation Plan. Learn Now How To Generate 100’s of Motivated Leads for FREE, Without Coming Off As A Pushy Salesperson and Losing Your Soul. You Will Soon Know How To Become One of the 1000s of Agents Making HUGE Money In This Changing Market. Claim your FREE spot now. YES, I Want To Attend The FREE Webinar! <——Click To Register
P.S. Free Webinar, Limited Space. Less Than 300 Spots Still Available.
Thanks to Inman.