About 20 years ago, there was a popular book called Who Moved My Cheese? By Spencer Johnson. The premise of the book was a business model of how the characters dealt with changes over which they had no control. Does it sound familiar? The recent rise in interest rates and other economic factors affecting the housing market may have you wondering who moved your cheese and wondering how to successfully navigate these changes in your business.
Now is the time to change your professional development skills to navigate today’s market and ensure you are ready to provide the best advice and guidance to your clients. Preparation is key – the conversations you had six months ago are no longer applicable to decisions regarding buyers and sellers today. As a trusted advisor, you should be prepared to have the following conversations.
1. Dealing with interest rates and proportionality
Holding value analysis is a tool used to calculate the amount of equity a buyer would accumulate if they bought a home now, compared to the amount of equity lost by waiting to buy. This can be summed up in the recently popular phrase “marry the house, the size of the day”. There are several key elements to managing the cost of waiting with your customers, and it’s time to make sure you understand each of them.
2. Will housing prices go down?
The best way to address this concern is to look at the data. For example, if a buyer plans to own a home for seven to 10 years, the short-term appreciation in home prices will not affect the equity built up in the long term.
The Federal Housing Finance Agency (FHFA) is a good source of information to include in counseling materials for buyers and sellers.
3. Is now a good time to list?
Today’s homeowners have benefited greatly from the housing market over the last decade. As a result, many people have a large amount of equity in their home.
Working with Move Up Comparison helps your customers decide their options. For example, if a client has $750,000 in assets and $450,000 in debt, they have $300,000 in equity. They can sell their current home and buy a $900,000 property, with 25% down ($225,000) and still have $75,000 in cash. They now live in a new home that suits their current needs. This is an attractive option for many, but clients need help doing the math to truly understand the opportunity.
4. Renting versus buying
Tenants considering a home purchase should look at a rent-to-buy analysis. In the year By 2021, 28% of the market will be first-time home buyers. It is important to help these buyers understand the impact of renting and buying. It is useful to have several comparisons of these costs made and presented in tables during consultations with buyers.
5. Price reductions
Real estate agents haven’t been dealing with a recent price drop. The best strategy is to get the property right from the entrance – however, some sellers want to “try” for a higher price, which is understandable. We can debate whether you should go another time with an abundance list. But, for now, you’ve had the property on the market for a while, and it’s not selling. Your seller is getting stressed, and you know it’s time to negotiate a price reduction. How do you approach this often challenging subject?
Are you ready to have these five tough conversations with your customers? Then check out Download 5 Scripts You Need Now, where we break down each conversation in detail, provide details on how to structure the conversation, and share resources to help you mentor and guide your clients.
About Wendy Forsythe
Wendy is the Chief Strategy Officer of Fathom Holdings Inc (NASDAQ: FTM), a technology-enabled real estate services platform providing residential brokerage, mortgage, title, insurance and SaaS offerings to brokers and agents using its proprietary cloud-based software, intelliAgent. Wendy has spent her career helping top brands, brokers and agents build their businesses. She has become a brand and growth leader, combining operational excellence with an agent-first philosophy. You can reach Wendy at Wendy@FathomInc.com.