Is there such a thing as a ‘typical’ real estate market anymore?
After the past two years, and now with inflation and mortgage rates rising, it feels like a never-ending game of ‘What’s going to happen next?’
Instead of trying to predict what will happen a year from now, focus on the next 30 days. What can you do for your clients in July?
To gain some different perspectives, we asked trusted BAM contributors to share what agents should expect for the July real estate market. Here’s what they had to say:
On the Question Every Buyer is Asking
Every consumer wants to know, ‘Should I buy a house right now?’ David Childers, Lisa Chinatti, Byron Lazine, and The Broke Agent tackled this one on this week’s The Walk Thru:
Watch the full episode for more of the conversation.
On Lead Generation
In July, summer festivities and vacations are kicked up a notch, which means people may not have the time – or the desire – to talk with real estate agents. There’s still plenty you can work on during the summer months, but be prepared for some “out-of-office emails.”
“It’s going to be harder than normal to get leads and your past clients/sphere to answer the phone or respond to text messages because 82% of Americans are taking a vacation.
Maybe you should take one too.
At a minimum, be ready for a lot of “let’s talk after the summer” objections and be ready to book follow-up calls for late August or early September.”
On What to Say to Clients
As much as consumers want to believe they can time the market, there is never a perfect time to buy or sell. As a real estate professional, your work lies in understanding your clients’ motivation, knowing the trends and historical data of your market, and having the right action plan.
“Interest rates are up over 100% since their all-time low. Inventory is up over 200% since January but still 50% lower than a “normal sellers” market. Demand is 35% lower than last year. If you don’t know what to say to your clients…you’re screwed.
Homes are still selling for a premium with the right strategy…that strategy being an aggressive list price and a high-quality presentation. Anything less won’t work.”
On Client Fears around Mortgage Rates
With rising mortgage rates, one of two things will happen:
- Potential buyers will back off due to fear of rates, leading to a plateau in prices, or
- People will realize the market will continue to move forward with or without them (similar to how the market was at the beginning of COVID).
“A lot of the conversations I’ve been having recently are very similar to the ones we had in March of 2020.
Right now, for sellers, we’re seeing that buyers are much more price-sensitive, which means that if you try an overpriced listing, you will be doing more and more price reductions. If you price it right and you bring it to market the right way with the right marketing and the right pictures…it will still sell.
We’re seeing in Charlotte, NC, a lot fewer offers on homes, but they’re still very strong offers. Even though we may not get 10, 15, 20 offers on a house, we’re gonna see 3-4 offers and we’re still gonna see 10 to 15% over list price.”
On Home Values
With those rising mortgage rates, homeowners are left wondering what will happen to the value of their property. Keep in mind there are many factors to consider when it comes to home values, but the closing price comes down to whatever buyers are willing to pay.
“There is a disconnect between agents watching the numbers, aspirational sale prices of sellers, and the reality of what buyers are willing to finance. Consumers will start to see a drop in list prices as more inventory hits the market and sellers have to be more competitive, however, year over year, these listings will still sell for far more than they would have last year, which means home values have still increased by comparison.
Home prices will drop, home values will increase.”
On Investment Opportunities
For rental and fix-and-flip investors, low inventory and high demand remain. But, in order to set yourself up for success with rising rates, you need to plan ahead.
“Sell everything as fast as possible and replace existing investment inventory at a 10%-15% discount to last month’s ARV (after-repair value).”
The next 30 days will bring more insight into what type of action consumers will take. How will you help guide them through this market?
