In a “normal” real estate market, I try to put together messages that are “evergreen”. They will live on in blog format, or videos etc. and provide some value today but be relevant down the road as well. This is NOT that. I am writing this just after Thanksgiving 2022 and the call to action is this: A short window just opened to get a deal on a house. Not just a few bucks off but the chance exists to save $25, $30 perhaps $50K depending on the homebuyer! This window is from now until shortly after the new year. The opportunity is here!
Real Estate & Mortgage Pros need to LEAD their clients right now. Especially if you have ever marketed yourself using some of the following phrases:
- “I want you as my client for life!”
- “My market knowledge will help you win w/Real Estate
- “My advice makes you money!”
Right now it is mandatory to step into the marketplace and show folks that remaining confused and on the sidelines is not going to help them, in fact it will cost them real money. As mortgage rates have moved up over the course of 2022 we have seen clients decide to stay put and do nothing. This may have been the right move for a bit of time as prices had not started to moderate, but this is changing.
As I have been speaking with our book of pre approved shoppers, they have said things like:
- I am waiting for the market to improve.
- Interest rates have gone up so much.
- We just don’t think it’s as good a time to buy.
After six months or so of this, we now have some definitive answers for this confusion. And remember, it’s human nature to do nothing when you are confused. So first of all, folks should make sure they are still qualified to buy at these rates. Or if their price range has changed due to the rates, let’s understand whatever the current qualified loan amount is. Second though is let’s stop adding to the confusion.
Last week, this was shared all over social media:
And it’s wrong. The math is wrong and additionally, it’s not compliant. Here is a reasonably compliant version:
Really though, this is adding to the confusion for folks. I mean really, if you are not an industry professional are you going to be able to read and understand this? Likely not! Additionally people are marketing buydowns, ARMs and other not easily understood on social media strategies to lower payments. No wonder people are paralyzed by confusion and have gone to the sidelines of the market!
How about we just LOWER THE PRICE. It’s easier messaging and it’s becoming available. At today’s 7% interest rates every $10K cheaper something is than a few months ago saves $66.53 per month. So $50K cheaper is $332 per month lower! Again…AT THESE RATES!
Buyers should act now for several reasons. The reasons just on rates alone:
- If rates go up from here, you’ll be glad you grabbed today’s 7% rates when they are at 8.5 or 9%..
- If rates are flat, you got a discount on the property v. summer and stopped renting or living in your old place. Get on with your life and cut a deal now!
- If rates drop down the road, you can refinance at that time and save a couple of hundred bucks a month (depending on the delta between the rates and loan size and what you get today). Also, if rates drop, the home value will likely rise back up since rising rates are causing the drop in prices.
- If you wait for rates to go back down, you will see prices rise back up. So waiting for the market to improve is the wrong play!
The best opportunity to buy and get an actual deal on price is here for the first time in 3 years!
In the mid 2020 to early 2022 market buyers were at the sellers mercy! Lines at open houses stretched around the block and bidding wars were rampant. It wasn’t unheard of to have a dozen offers or more for a property. Buyers would waive inspections, appraisals and overpay by tens of thousands of dollars just to get the sellers to take their offer.
Now you can negotiate and get a great price with the protections in your contract that are normal for inspections, appraisals, etc. So yes, rates are up, but that’s why prices are down!!! Now is the time to act. You can’t get the discount created by rising rates and the low mortgage rate at the same time!
Sellers are stressed going into the holiday season for the first time in years! They are worried about rising rates! They are kicking themselves and asking why they didn’t come to market earlier? What if my neighbor comes on the market at a lower price than me? What if I can’t sell for months and have to keep making payments for another half a year or so? They are nervous for the first time in a long time. If you want to sell, you have to play ball!
But come the first week in January, sellers and their agents will take properties off the market and come back on the market as a new listing in February when the “spring market” starts. Now is the time to make a deal!
Clients owe it to themselves to understand the market and get past their confusion. Real estate professionals have an obligation to help them understand and act! There are tens of thousands of dollars at stake and everyone needs to show up to their own rescue!
