Hey guys, quick stat that can be meaningful for all of us is this:
Luxury home sales are up 81% compared to a year ago.
Now, why would that be? Why are affluent buyer's coming into this market so heavily?
The answer is they're smart. And they understand they can buy an existing luxury home for far less than it would cost for them to buy a piece of raw land, develop that land and build a new property of a similar size.
So they're seeing these as bargains.
Now yes, of course, prices have risen as demand has risen. But still — its way under what it would cost to build new construction.
So this is an opportunity for all of us that work in a market where there's some affluent housing.
Go back and look over the past two or three years of all the expired listings in the luxury market and target those listings. We know there's now a massive demand.
But it's a place where a lot of agents don't feel confident or comfortable. And so they...
Hey guys, interesting stat for you:
Luxury housing is soaring! It's up 81% from the number of transactions from last year to now.
Now why would that be?
The answer is if you look at the luxury housing market in most areas of the country, you could not build that luxury home for what you're paying for it today. Because construction costs and land development costs have gone so high.
When people with money are looking at these listings, they're saying, "Hey, wait a second. This is an opportunity. This is a market opportunity for me to buy, because I know I couldn't build it for the same price."
They're actually buying at a discount in their minds. Even though prices have risen, they haven't outpaced what it would cost to build these luxury houses.
So this is still an opportunity. It's a market space. And a lot of people haven't focused on it. But there's a lot of great, great buys within the luxury market space.
So check it out,...
Join this fast paced interview with rockstar REALTOR Patrick Fossati. After arriving in his market area just a few short years ago Patrick is making a huge impact in the real estate arena. Using a combination of online lead generation, networking, mailings, and sphere of influence strategies he is attracting clients instead of chasing clients. Listen and learn as Patrick shares his reasons for scaling his business by hiring a assistant and a buyers agent, his creative approach to networking, how he rewards cooperating agents, and how his unique branding is allowing him to build a referral based business.
Hey guys, when you set a price on a property, how fast do you pivot if you got the price wrong?
And we all get prices wrong, I've gotten prices wrong. Anybody that's been in the industry for any length of time has gotten the price wrong.
So how fast do you pivot? How fast do you reach out to the seller to try to get that price adjustment?
There's a new study done by ShowingTime, which shows that the average across America, in our current market for there to be a massive drop in activity is five days.
After five days, activity goes straight down.
So we have a five day window to try to generate a lot of showings and hopefully multiple offers. If we get past that five days and we don't do an adjustment, we're probably going to have a hard time meeting the market where it's at.
So we have to lay the groundwork with sellers and have a conversation with them about this five day window. It's not two weeks. It's not three weeks. It's not a...
There are a couple of numbers we need to look at to understand where the market's at and what's happening with the market.
Number one is the pending home sell index, which had a decrease of 1.9% compared to a year ago. And again, a 1.9% decrease compared to last month. Coincidentally, it was the same number.
But when we combine that with an increase in inventory of 4.1% the month before and a decrease in interest rates because they fell back below 3%.
So we have to look at this as the whole and say:
Why would there be a decrease in sales when we've had an increase in listings and a lower interest rate?
Why aren't buyers saying, "Hey, I have more to choose from and my interest rates are going down. Why don't I own the market?"
Buyers aren't doing that. In fact, they're pulling back a little bit from the market.
The reason is...
Buyer price resistance
Buyers are saying, "Hey, it's been 112 straight months of home price increases....
The Wall Street Journal just put out an interesting article about a company called Invesco putting $5 billion into a hedge fund that's purchasing single family homes.
And they're not alone. There's another $6.5 billion dollars targeted with other hedge funds doing exactly the same thing.
Now, why are these hedge funds going after single family homes?
Well, they've identified that they can get a cap rate of as much as 6.8%. That's the target rate that they're comparing to apartment buildings and commercial — which is like the low sixes.
So what they're saying is: we're going to make money on this. And we're going to rent these houses to millennials that are choosing not to become homeowners.
What we need to do as an industry, number one is to recognize that we should be investing in single family homes as well. But also we need to encourage everybody that's not a homeowner today to get into the real estate arena and buy their...
Are a ton of foreclosures about to hit the market?
The answer is absolutely not. Let me tell you why:
This is a myth that's happening among a lot of renters. People that don't own homes yet are all waiting for the shoe to drop and a bunch of foreclosures to hit the market. Let me tell you why it's not going to happen:
There is something called forbearance. And a lot of people did tap into it at the beginning of the pandemic. The experts thought that about 30% of mortgage holders would need to tap into it at the beginning of the pandemic. In other words, forbearance is where a lender gives you some level of grace.
They say, "Hey, you can stop making your payments for a while, or you can make a minimum payment or we'll tack on your payments to the end of the loan." There are a lot of different variations to it.
But the government said they want everybody to have a six-month opportunity if they've been struck by COVID or...
What if from every listing you take, you received five transactional sides? Imagine you take 10 listings in the next 12 months. And that leads to 50 transactional sides.
Is it possible? Absolutely.
And more importantly, we have to look at what we've done the last 12 months — how many listings did we take and how many sides did we create? If we are leaving money on the table, it's probably coming from the activities that we're not doing when it comes to our listings and those opportunities are so massive.
We have a system which I call the "5 Star Listing System" and it identifies the five easy transactions we can secure from every single listing we take.
1. We're going to sell the listing that we take
Now, that sounds simple in today's market. 95% of listings are selling as soon as they hit the market. But as the market transitions, as the market shifts, believe me, we're going to need to be able to refine our presentations and...
According to a new Bankrate survey, millennials are having high levels of buyer's remorse in this market.
In fact, two thirds of millennials experience high levels of anxiety after the purchase, while they're in escrow, which can lead to escrow failures.
What are you doing about that?
Not just with millennials, but with all buyers in this topsy-turvy market. How are you addressing buyer's remorse? And for that matter, seller's remorse?
I'm going to give you a strategy called the Three R Strategy, which can help you deal with remorse in a unique way.
The first R is Reconfirm.
Reconfirm with people about why they made the decision to buy or sometimes sell. So you might say things like:
"Hey, won't it be nice not to be a renter anymore? And every single month when you're making that payment, it's building your equity, not building your homeowner's net worth. You're going to be benefiting from that."
"Hey, just imagine now that...
We just got stats that show listings have increased again. For the past several months, they've been increasing. And now they've increased again by another 4.1%.
So now we're about 2.6 months of supply in the country. Not a lot, but more than it's been in a long time.
So we're starting to see listings come back to market.
The question is: Are you starting to see more listings come into your portfolio?
If you're not, you have to ask yourself why.
The number one reason why we don't have as many listings as we should is we're just simply not asking for them. We're not asking enough people to give us listings as we should. And we're not asking for enough referrals.
I'll give you one technique that blew my mind recently that one of my students used. And I received it because I'm on his mailing list.
He sent me his resume, his resume letter, the resume letter had a cover letter, just like a regular resume. And on the cover letter, it...