Hey guys, when we're talking to a seller and we're having this conversation about price—because price is the ultimate marketing tool that we have—sometimes it's hard for sellers to understand the relationship between the price and interest rates.
So I wanna give you some scripting and some dialogues along these lines, which is really important. And it's focusing on the difference in affordability for buyers and really how most buyers are payment focused.
So if I'm sitting with a seller, I might say:
"Now you've probably been hearing that the interest rates have been rising. But I wanna relate that to what that means to a buyer for your home. So the beginning of the year, interest rates were pretty much at 60-year lows or around 3% level. And since the beginning of the year, we've really more than doubled. We're now pushing 7% and we're probably gonna be over 7% very soon.
And so here's what...
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...
A number that we should be concerned with right now in the market is 16.1%.
So what does 16.1% represent?
It represents the number of transactions that were canceled last month. The last time we saw a number that high was at the beginning of COVID when buyers really didn't know what was gonna happen. March, April, when COVID really went into full effect in our country in 2020. That's when you saw this same level of cancellations. And that's what we're seeing again right now.
So how do we tighten down offers so that sellers have some clarity that they know they're gonna get to closing?
I'm gonna give you several things to think about. You might have a few more. But one of the things is getting the disclosure statement signed as quickly as you can.
Most states require a disclosure statement. This is where we're the seller's gonna disclose everything they know about the house to a buyer. But not waiting around, not delaying getting that...
I had one of my best agents come to me a couple years ago and she said, "Jim, I got a listing that's priced right. And we're getting showings. But we're not selling the property."
And I said okay, let's go take a look at it. So I made an appointment with her and we went up and looked at the property. And immediately when I pulled up, I knew what the problem was. The property had a steep driveway. And I told her I bet a lot of people were commenting on the driveway. And she said, "Yes, true. We're getting a lot of negative comments on the driveway. And I think that's really the biggest reason why people aren't, you know, looking at the house. Or looking at the house, but then rejecting it."
So we went in and explained to the sellers that they can have the best price property in the world. And actually, have the best house in the world, but that driveway could be the stumbling block for getting it sold.
So I'm gonna give you a...
How do you normalize a price reduction?
People don't wanna feel like they're the only ones reducing their price. And some sellers may not be in tune with the market like we are. They may be assuming that the market's like it was six months ago. And they're the only person that's not selling right now.
Of course, we know that's not true. We know the market's changing. We know there's more inventory hitting the market than we've seen in a long time. We know interest rates are impacting the marketplace.
So how do we normalize a price reduction?
The way you do it is to show others in your market that are also reducing their price at the same time. So here's how you do it.
When you're talking to a seller, you can say:
"Hey, Mr. And Mrs. Seller, you know, we haven't had a lot of showings and that's probably directly to related to our price. We're seeing more competition. Interest rates are definitely...
Hey guys, now that the market's becoming more competitive, one idea to help your sellers be more competitive is to use the "Buyer Eye Strategy."
What's the "Buyer Eye Strategy?"
When you're sitting with the seller and you've just listed to the property, you might say something like this:
"Hey, Mr. And Mrs. Seller, now that we got the property listed, here's what I'm gonna do when I get back to my office. I'm going to treat you guys as if you were a buyer for a property that's very similar to yours. So here's why I'm doing that:
"I'm gonna set you up an MLS on a search pattern that's gonna include your house, but also any other houses that are listed that are similar. This way, you're gonna see everything in real time, every single listing that's happening. Every price reduction, every pending, every closing that's occurring in your price category. And this will really tune you into the market.
"And if you decide, Hey, look at this as a new...
There's a new stat out that shows some unprecedented numbers. And the numbers reflect that home buyers entering the market today are paying 39.4% higher mortgage than they did last year at the same time.
Now, why would their mortgage go up almost 40%?
The number one reason?
Also a bit of home price increases as well. But by and large interest rates going up seven of the last eight weeks. They've gone up so fast.
So when we look at this, some of our buyers may be saying, "Hey, let's pump the brakes on me buying."
How do you respond to that? Well, the response should be a reflection on what happens if they don't pull the trigger now and they wait. We know the Fed is already planning to do six more rate hikes this year, starting right now in May.
So as we begin to roll through the rest of the year, it's highly likely these interest rates aren't gonna go lower. They're gonna go much, much higher as the Fed tries to break...
One thing we should all be aware of right now is that a lot of home sellers are reevaluating their price.
And one thing you should be monitoring in your own market area is the number of price adjustments that are occurring every 24 hours. Maybe on your hot sheet, your MLS data sheet, it's gonna show that number. Keep it a close eye on that, and then think about it with your own sellers.
Here's something that's interesting:
In the last few weeks we've seen 3.5% of all the sellers in America reduced their price.
Now that doesn't sound like a lot. But remember, we're coming off one of the hottest real estate streaks we've ever seen in our market.
But the market's starting to cool when it comes to pricing and people are starting to adjust to get ahead of the market. Typically we don't see price adjustments begin to happen at this level until July or August.
So why are sellers starting to adjust prices much, much earlier than ever before?...
Hey guys, we are still in a low supply market. It's the lowest supply real estate market we've ever seen.
Despite the marketing changes and interest rates rising and the market dynamics kind of influx, still low supply and high demand.
So based on that, how can we go out there and still crush it in the market? How can we thrive despite the market conditions starting to shift under our feet?
One strategy is use the "Pocket Listing Strategy."
It's one of my favorite strategies and it's totally underused. Very few people do it.
Here's the concept:
One in seven homeowners today has raised their hand and said they're interested in selling the next three years. That's 15% of the population.
Drive through any neighborhood, and one of every seven homes you drive by is thinking about selling in the next three years.
There's a massive pent up seller demand, but how do you turn the key to unlock it?
Well, a large group of those people may not be...
Here is a crazy stat that will be interesting for your sellers when you're sitting down to talk about a listing:
84% of the properties coming on the market are selling in less than 30 days across the country.
Now I would encourage you to dive deeper into your own local MLS and see what the number is for your local MLS. But it's probably gonna be somewhere in that neighborhood.
Now, another inverse number to that is what percentage of properties are staying on the market longer than six months? When you go back to 2011, that number would've been about 35%. Today, it’s 2%.
2% listings coming in the market are staying on for longer than six months.
You can just see how the market is so strong right now for sellers and how it's such an advantage to put your home on the market today as a seller.
Another great number to pair with these numbers is the fact that on average sellers are receiving 4.8 offers per listing. That's coming on the...
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