Hey guys, did you know that the average rental price for a two bedroom home across the country, believe it or not drum roll is...
Can you imagine that? It's incredible!
But at that level, how much house could you buy? That's an interesting question. And it's a question that we can all answer.
So the $1,700, if you had 20% down with an average mortgage today would buy you a home priced at about $455,000, which is a shocking high number.
You know why that's so high? Because interest rates have dropped again to a 60-year low.
So instead of renting, somebody can actually go out and buy a house for $455,000. Now that's assuming they had 20% down, but let's assume they don't.
Let's assume they only have 3.5% percent down, which is a typical FHA loan. That might cut that number down by another a hundred thousand so maybe they could afford $355,000.
But wouldn't that be far superior to renting?
These are the kinds of conversations we...
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...
Land is the last thing to heat up in any market. And it's the first thing to cool off.
Why is that?
Because everybody takes the low hanging fruit. If you think of the real estate market like a tree, land is at the top of the tree. Everybody takes the low-hanging fruit before they get to land.
But now that everything is sold out in most markets, people are wondering what they can do. And that's when they decide to build.
That's why land is starting to heat up. Also, developers are starting to buy land so they can subdivide it and build more homes. Which is another reason why why land is starting to heat up.
As an agent, you can actually go after land as a prospecting method. It's an effective method because very few agents are going after land right now.
But as you drive around in your neighborhoods, you'll see a piece of land in a subdivision that's not developed. Or you'll see a piece of a lot that's an infill lot...
Should your buyer float their interest rate or lock now?
Interesting question. Some of you really gotta be working with your lender to have that conversation with them. But let me give you a little bit of what's been happening to date in January through roughly March 2021:
Let's look at the numbers and dig into them that I got from one of my lenders — who is an incredible rockstar in the lending world. His name is Brian Case and his team at Guild Mortgage gave me these numbers:
For the entire year of 2021 so far, a floating borrower — or somebody that took the gamble and threw the dice to see if they can get a better rate tomorrow than
they can get today — would've won 41% of the time. And they would have lost 58% of the time.
Because 48% of the time rates went down and 58% of the time they went up. So it's a gamble that may not be paying off.
Overall interest rates have gone up about a half percent since January....
Here's some great language to use with buyers as they're entering the market today. We know it's a high demand, low supply market.
But how do we coach them through this process?
One way is by using the "Auction Analogy." You can do this by talking about a list price as being almost like a reserve price. So the conversation (which you can see below), will give you a good way to help buyers understand what's happening in the market dynamics. You can simply say:
"Hey, now that you're entering the market, I just want to kind of give you a little overview of what's happening in terms of pricing and where sellers are at. We're in a very low supply market and a very high demand market. So, on average, sellers are receiving a least four offers per home. Now some receive less, some receive more. But in general, we're going to be competing for a buyer for a seller's love. We're going to be competing with other buyers. So we want to come in...
What is educational marketing?
Educational marketing is one of the most powerful techniques you can use to build trust and unlock more buyers and sellers for your business.
But how do you do it?
Well, you got to understand that a lot of expert marketers use what's called "The Curiosity Gap." That's where you pose a question or you put a statement out there and then it makes people curious about knowing the answer.
Now we fall into this curiosity gap all the time — from headlines to news soundbites that are trying to get you to watch the news at six o'clock, book covers, wine labels, and all kinds of things create curiosity in us. But when we look at our knowledge quest as human beings, we're always driven by not knowing and the power of wanting to know what we don't know, right?
So here's an example of this:
One of my good friends, Scott Lewis, a superstar realtor that I work with put this post out. And it was simply about the...
Something interesting that you might find surprising that it relates to real estate, but fertility rates in the US have gone down dramatically over the last hundred years. In America today, we've actually had another 1% decrease.
We have the lowest birth rates than we've had in a hundred years.
Here are the numbers:
For every 1000 women in America aged between 15 and 44, there's 58.3 births. And you compare this to World War Two, when all the baby boomers were born, that number was more closer to 140 births! So huge difference in the numbers.
Now, how does this relate to real estate? I'm going to share with you now. Here is the the data today:
Looking at buyers who have children under the age of 18 in the home, the share of that group has declined from 58% in 1985, all the way down to 33% in 2020. So there's a much smaller group of people buying homes. It's actually the minority, not the majority, who have kids under 18 at home.
So you need to...
Why is list price versus sales price such an important number to know and master in your market?
Here's the answer:
Buyers and sellers need to understand that when they're making or accepting offers, this number will have impact. And I'll give you an example:
Every buyer wants to get a great deal, right? Every buyer wants to feel like they're beating the market. So when we sit with a buyer, we need to educate them about what's happening in the marketplace. For instance, in my market today, sellers are receiving on average 99% of list price. Some are getting much more — they're getting 105% or 106% of list price. But the average in our market is 99%.
So with a buyer, what I'll say to them at the beginning of the relationship is:
"Hey, you know, many homes sell for full price in our current market, or even over full price. But the average is 99%. The key is to see how aggressively the sellers price their home compared to other listings in the area....
Have you ever heard of the aggregation of marginal gains? I hadn't either until I read a story about the British cycling teams winning the Tour de France. They never won the Tour de France before 2010. But their new coach, David Brailsford, challenged them to look at everything they're doing — even the smallest things — to see if there was a way to improve it.
They started with the typical things you'd look at like their diets and exercise programs. But then he went a step further — and started looking at the pillows cyclists were using, the exact time they fell asleep and woke up, their daily routines and more to give them insight into their overall training system.
They figured out that even a 1% increase in any area of efficiency would aggregate marginal gains and finally create wins.
You can do the same thing in your real estate career. You have so many different avenues you're managing, but just getting 1% better in each of these areas can create big wins for...
We see so much marketing that is irrelevant and meaningless — it doesn't resonate with anybody. It's trying to be ironic, cute, and Instagram perfect.
But nobody really cares so these marketing gimmicks fail.
What do our potential clients care about then?
Learning something new — which will always make them stop dead in their tracks and consider your message.
That's the basic idea behind my "Educational Marketing" strategy.
Now let's think of it in terms of real estate:
Not everyone has an interest in real estate. Buyers and sellers usually only get interested right before they're ready to sell their home or buy a new one.
So when a buyer starts to think that they should buy a house, that's when they start to look at all the terms and processes around real estate. Or when a homeowner gets interested in selling, that's when they suddenly get tuned into the market conditions.
That's the power behind using "Educational...
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