We are in a different marketplace, aren't we? The market totally rolled over into a buyer's market in a lot of price categories. And because of that, we need to hone our negotiation skills. So today I'm gonna give you 10 strategies to help you be a better negotiator. Because we know if a buyer feels good about the negotiation, they're gonna often be excited, and tell their friends and family to use use to purchase their next property.
Remember, it's all about referrals and doing an amazing job.
1. Discovering the motivation
It's simple, but it's interesting how many agents haven't done that. We just had an offer come into my office over $2 million and guess what? It was electronically sent without a phone call to the other agent. Very frustrating experience for the listing agent. But this is the example of a lot of buyer's agents that don't have any training. They're not calling the other listing agent and asking simple...
What's the number one reason somebody should be buying a home now as opposed to waiting?
Number one reason is this:
Lawrence Yun, chief economist for NAR at a recent conference said this. He said that it's totally within the realm of possibility that we'll see interest rates at eight and a half percent interest next year in 2023.
Why? We know the Fed has already announced they're gonna do another rate increase in November and another one after that, then they're gonna take a pause. So two more increases are coming and we're already at 7%, eight and a half, maybe a low estimate. So when, although we feel like the interest rate is high, it's not high relative to history. Remember the average interest rate over the last 50 years has been 8%. We're at 7%. So when we look at it from a historical standpoint, it's not as high as we perceive it.
We perceive it to be high because we're basing it on the 60 year low. We just live to...
News from NAR (National Association Realtors) came out recently and they said that home sales are down 23.8%. But strangely, home prices are up 8.4%. So where's the conflict there? How are we having these crazy numbers?
Well, here's the reality — there's two reasons for it:
One is that we are still benefiting from appreciation that happened at the beginning of the year when interest rates were close to 3%.
And the second reason?
We're benefiting from low supply. We still are at a historically low supply, about 3.3 months of supply. Meaning if every REALTOR stopped working today, it would take 3.3 months of time for us to sell out that inventory.
So what's a healthy balance market? A healthy balance market is about six months of supply.
By the way, I want you to get this in your mind. It's completely different than the Great Recession. We entered the great recession with 11 months of supply. Strong buyer's market. We are...
Would it be crazy to buy a house now?
This is a question that people are gonna ask you. I've heard this question come up a few times just in my social circles.
I'm gonna tell you there's two key reasons why it's a great time to buy a house. Not just a good time, but a great time to buy a house.
1. You have more buying power than you've ever had in the last 10 years.
Think about the last year. Just last year, if you were gonna go buy a house, you're competing with 10 other buyers, you're always gonna be in a multiple opera situation. You're gonna have to come in with non-refundable more money, go over full price, have an appraisal gap language, remove inspections before you've even done an inspection. You were at such a disadvantage as a buyer.
Let's contrast that with today:
When you come in as a buyer, first of all, sellers are reducing their prices en masse. Plus, they're gonna reduce their price again, when you make an...
What is the picky inspection?
Now, for years we've been in a seller's market. And the last thing we wanted an inspector to do is to come in and kill the deal, right? But today the market is shifting towards buyers. And buyers are starting to gain more and more leverage in the marketplace.
So when I'm counseling my buyers, I might say, "You know, we wanna get an inspection. That's a fair inspection. But I'm kind of leaning towards advising my inspector to be a little bit more picky than they might have been in the past. Let me tell you why:
Because what we're doing when we do an inspection is really looking at health and safety issues and really big structural issues. You know, the roof is going bad, or there's a bad foundation, or something like that. The minor stuff, the things like just noting the age of a water heater and you know that there's a crack in the sidewalk and you know, the basic stuff, the cosmetic stuff is...
Hey guys, have you ever heard of a blended interest rate?
A blended interest rate is gonna become really important to a lot of us selling real estate in the coming months and years as these high interest rates stick with us.
So here's what a blended interest rate is:
Imagine a buyer has a budget, and they're gonna go out and buy, let's say, a $700,000 house. They have $100,000 down, and now they have $600,000 they're gonna finance. But they can't quite swing the high interest rates that are out there today. It's just gonna put 'em in a place where they can't afford it.
But they're willing to be creative and if you have a seller that's going to be creative, you can still put this deal together.
So here's an example:
Let's say that they were able to go out and get a first mortgage for $400,000 at the current interest rate. Let's call that 7.5%, which is probably where it's headed pretty quick. And the seller was willing to carry a...
Is it a good time to buy a house today?
It's an important question for us as REALTORS to be able to answer and really be passionate about it. This isn't just an answer we're giving because we wanna sell a house, but an answer that's actually backed up by real data.
That way, buyers will actually believe what we're saying and be influenced by what we're saying.
So here are 5 key reasons, backed up by data, why people should be excited about entering the market today:
1. Rents are rising quickly.
So if you're not a homeowner, what are you by default? In most cases, you're a renter. So latest reading shows that rents are up 14.8% compared to a year ago. And they're likely to continue to rise at a fast pace going forward.
2. Interest rates.
Interest rates have settled back down a little bit. They're not at the peaks anymore. So interest rates historically, when you look at the last five decades, have averaged 8%. Right now, we're in the high...
Here's some information that I think is super powerful that really no one talks a lot about. But it absolutely will impact you and I as REALTORS.
From 1968 to 2000, the average building in the country was 1.5 million new units. That's a long history there, 1968 to 2000. From 2000 to 2010, that number dropped to about 1.28 million units. Okay. Then we had a big building boom during the run up to the Great Recession. But then it collapsed and builders stopped building at all.
At the end of the day, when you add all those numbers together, what you find, and what analysts have found is that we are not building enough homes by a mile, right? And in fact, in order for us to just meet the supply demands of the country, we need to add 5.5 million housing units to our current inventory out there. And if we don't do that, we're gonna have perpetual low supply, which leads to higher prices and leads to kind of the market that...
Why should a buyer buy a home in today's market?
If we don't know the answer to that, then it's gonna be a struggle to talk to buyers about why they should buy. Because everybody thinks they should wait:
"Shouldn't I wait for prices to come down? Shouldn't I wait for interest rates to come down? Shouldn't I wait for the recession to kind of come and go?"
There's gonna be a lot of those mindsets. And we have to be able to answer the question: "Why should I buy now?"
And really we have to sell ourselves first before we sell anyone else. So I'm gonna give you four reasons here that someone should consider buying now as opposed to waiting or not buying at all.
1. Some sellers are panicking.
Why are they panicking? Because they put their home on the market yesterday and they expected just to get overrun with buyers. Then maybe two or 3, 4, 5 days goes by and they still don't have multiple offers. They don't even have very many...
What is an anchor point? And how can it benefit you when you're talking to sellers about getting their prices down?
Well, an anchor point is a way that we can help sellers recognize where they're at relative to the competition of the market. And what's gonna happen to them if they don't take action.
So let me give you an example:
If you have a seller in a neighborhood and you call them and you say:
"Hey, Mr. And Mrs. Johnson, I was hoping I'd have a conversation with you because I did a little research in the neighborhood, and I know we haven't had the activity that I've been hoping for. And so I'm concerned about getting the house sold. So I did some research. I know, you know, the property over on fourth street. It's been sitting in the market for a hundred days. I know you'd drive by it every day.
"And I did a little research on that one. It looks like they started at $600k and now they're down to $550k,...
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