You’ve seen it all over the news and social media; the market is shifting. The recent rise in interest rates and other economic factors impacting the housing market may have left you wondering how to successfully navigate these changes in your business. Now is the time to get proactive in having conversations with your clients and potential clients.
Will housing prices go down?
While nobody has a crystal ball, the best way to address this concern is to dig into the data. For example, if a buyer plans to own the home for 8 – 10 years, even a short-term dip in the price appreciation will not adversely affect the equity built over time. Information to include in your buyer’s and seller’s presentations can be found at the Federal Housing Finance Agency.
Renting versus buying
As agents, we get a lot of renters looking to buy. A rent versus buy analysis is a great tool to show renters the benefits of buying. These charts can guide conversations during your buyers’ consultations. Remember not to discount this market segment. In 2021, around 28% of the market were first-time home buyers.
When is a good time to list?
The last decade of this strong housing market has helped many homeowners increase their home equity. Working through a move-up comparison is an easy way to help your clients understand their options. For example, if your clients currently own a $700,000 property and owe $400,000, they have $300,000 in equity. They could sell their current home and buy a $900,000 property with 25% down ($225,000) and still have $75,000 in cash. While this is an appealing option to many, one way to show your expertise is to talk your clients through the math, so they truly understand the opportunity.
If I wait, what will it cost me?
Encourage your buyers to work with their lender to create a cost of waiting analysis. This analysis is a powerful tool to calculate the amount of equity a buyer would accumulate if they purchased a home now versus the amount of equity lost by waiting.
Price reductions
While the best strategy is to have the property priced correctly from the start, that isn’t always what sellers want. Some sellers will start with a higher price and see what they can get. We can debate whether you should walk away from an overpriced listing at another time. Once you’ve had the property on the market for a while, if it still isn’t selling, fair odds are that your seller is getting anxious. Now is the time to have a conversation about reducing the price.
Are you ready to have these five game-changing conversations with your clients? Then, check out our download, where we elaborate on each exchange and provide details on how to structure the dialogue and the resources available to help you advise and guide your clients.
