I have some good news for people that already own a home that are in your database.
Here's the stats:
According to the KCM blog, home equity is up 29.3% across the board — which equals $51,500 in added equity over the past 12 months.
So then the question is:
Well, what can people do with that equity?
And there are a lot of things they could do:
They could pull it out in cash with a refinance, of course. They could take that equity and use it as a way to move into their dream home by stepping up — and there's a lot of people out there that may not realize that they can step up into their dream home with very little changes in their payment because of their equity.
There are tons of conversations you can have here.
Take that data, repackage it, and push it out to your people in your sphere of influence and start having conversations with them.
You could say, "Hey, would you like to get a specific number for how much equity build...
Is the market in a bubble situation? Is the market about ready to collapse?
Some people say that they're waiting for the market to collapse.
Well, that's not going to happen.
Here's the number one reason why:
When we look at the last market collapse that we had, which was 2008 and is still fresh in everybody's memory, it was caused by credit running amuck.
Credit was being given to people that shouldn't have been able to get a loan. In other words, there was a credit issue there.
People were getting liar loans and no doc loans. So the credit markets were out of control. They were bundling these junk mortgages and selling them on the stock market as derivatives. When that collapsed, it caused Lehman brothers and all these others to start collapsing, which caused the massive 2008 collapse in the marketplace.
Are we in that same situation today?
Absolutely not! Nothing compares to that.
In fact, right now, we have is super strict...
One question that you might get, or a comment that you might get about the market is everybody's talking about home prices being very high.
They might say, "You know, I don't think I'm going to enter the market because the prices are so high. Or I don't think this is sustainable, that these prices are so high."
And home prices have gone up over the last couple of years. But another measurement to take a look at when we're analyzing the market is something called affordability. It's actually something that's tracked by the National Association of REALTORS.
Affordability is key because it takes into account several key factors.
1. Your income — the median income of families across the country.
2. It takes into account the median interest rate being paid by mortgage borrowers across the country
3. And median pricing
When you combine those three factors, you fid affordability is better than it's been in decades.
Now, how could that...
Zillow announced recently that they've stopped buying homes!
In their press release, they said they had supply chain issues and labor shortages, which is interesting because when you look at what they actually did in Q2 and Q3, where we've had kind of the same issues going on, they actually doubled the amount of homes that they purchased during that time compared to last year.
So why would they go from twice the amount they were buying last year to stopping on October 18th?
Some people are saying that one reason might be they're seeing market changes, just like we've been talking about. They're seeing a lot more listings coming to market which creates pricing pressure and competition. So they may not be able to come in and pay these high prices and then resell it at an even higher price. Because Zillow runs a flipping operation, right?
So we're actually seeing that. I've got a lot of students and a lot of parts of the country that...
Brian Bogaert is an active real estate investor who also loves working with REALTORS. During this podcast Brian explains why leveraging your talents is the key to building long term success. He also dives into why real estate agents have an unfair advantage in the investment world compared to stock brokers and why financial freedom isn’t just good for you it’s good for your clients. During the conversation we also dive into how working in the investment side of the business can lead to creating “serial clients” that have the potential to buy and sell multiple properties over the year. Don’t miss this podcast!
I got a quick note on feedback. This came to me from one of my friends that works with me, Adam McGrew. He started doing this a couple of years ago and I thought it was brilliant.
We're always asked for feedback when we do showings. Number one, give the feedback because the shoe's going to be on the other foot. When you are selling a listing and they show your house and you're going to ask for feedback. And if they don't provide it, it's going to be frustrating. So always give feedback.
But now you want to go further than that. Meaning, when you're giving feedback, it actually can be a pre-negotiation tool.
This is how Adam uses it:
Instead of just saying, "Oh, it's a nice house, but they chose another one" or something super simple that's not meaningful, Adam gives a detailed text.
In the text, he gives an insightful analysis of the home, how it compared to other listings, what the buyer noticed as they're walking through the house...
Are you doing a weekly call to all your sellers? If you haven't started doing this, this is something you need to be doing. And as you take new listings, you need to just create this expectation that you're going to call them every week.
My preference is on Monday. I want to get the week started off right. And having my Monday morning power hour, where I call sellers, is super important in my business plan.
So why do we make calls to our sellers every Monday?
Because we need to earn the right to be able to ask for price adjustments, condition improvements, or incentives if they're needed in order to get the property sold.
The market's changing and not every single listing you bring to the market is going to sell instantaneously anymore. Often we're going to have to make some adjustments in the condition, price, or incentives we're offering.
Here's how you handle that conversation with the seller:
I'm going to start by saying, "Hey,...
As we begin to price property, it's important to understand the difference between comp-based pricing and competitive-based pricing.
Comp-based pricing is what REALTORS typically do when they do a CMA, they do a comp based pricing analysis. What they do is they look at properties that have sold three to six months ago, very similar to what an appraiser does. And normally in a typical market, that's very effective. But we're not in a typical market.
When you're doing that today, you could have an inherent flaw in your data. And here's what it is:
Back in April and May, all indications point to the fact that we probably hit our apex point of the market. Meaning that home sales were indicating at 23-26% appreciation rate compared to the year before. So that was the peak acceleration of our markets.
Since then, we've been moderating. And what that means is that people aren't getting 23-26% compared to a year ago. Now it's down to about...
If you want a great marketing message that you can put out to your audiences today. I'm going to give you one right now.
And it's not from me. It actually comes from the NAR Economist Blog. If you haven't checked that out, check it out. I pull a lot of data out of there all the time.
But they had this great example of how much equity someone would have built up over a 30 year period.
And so they took an average home price and they went back 30 years ago and said, what was the average home price? What would be your guess?
The average home price 30 years ago was $103,333 — an odd number, but that's what it was.
Then they took somebody that put 10% down back then, had an average payment based on the interest rates at the time, and figured out how much equity they would have built up through equity appreciation and paying off their mortgage.
So what would they end up with net worth today just from their house?
The answer is...
How long do people stay in their homes? It's an interesting question. And it's a question that's related to marketing for us.
Prior to 2008, the average person stayed in their home five years before they moved on. So quite a bit of turnover there.
From 2008 to 2016, that number moved up to eight years.
And now that number has gone even higher — it's now 10.6 years.
So why are people staying in their homes longer? Well, there's lots of reasons.
The Great Recession had an impact. Super low interest rates have an impact. Having less inventory in the markets for people to move up to and change homes has also made a big impact.
But one question we should know and ask our clients is how about our local market? How about with our own sphere? What does that look like for the people that you're actually doing business with?
It's a great text. It's a great social media post to ask this question:
"The average homeowner spends 10.6...
Jim would like to talk to you about your real estate business with a complimentary 30 minute coaching session.
During the call be prepared to discuss - Your goals for the next twelve months. Your time management and priority management strategies. Your willingness to change and adapt to a changing market landscape, and your biggest choke points - what's really holding you back
The road to transformation starts with small steps. Take your first towards a better real estate business today...