The market is shifting, not crashing. Tuck your drama in and get back to work! If you expect buyers and sellers to transact with you, you must be educated, motivated and proactive. Knowledge = Confidence. Ignorance = Fear. There are always people in the marketplace who wish to work with caring, competent, and skilled professionals.
Follow these 14 simple rules, so they’ll choose you.
More days on the market do not equal lowball offer time. You’ll probably pay the list price instead of the over-list price. Current statistics show that the most recent closings sold for 99.8% of the list price. You might have it inspected and possibly not have to guarantee the appraisal gap. Don’t lose again just because you’re getting too aggressive too quickly. The market isn’t crashing.
Set your seller’s expectations for two scenarios. Yes, it may sell right away, possibly with multiple offers; however, if it doesn’t sell right away, what does that do to your seller’s plans? Understand your seller’s motivation and time frame and discuss different scenarios.
Prepare your listings as if you have more competition. Buyers are getting pickier and will pass on a home that seems neglected. Buyers are starting to believe there will be more inventory soon and may pass on something that’s not quite right. Proper previous preparation prevents pitifully poor performance! (The 7 P’s). Make it shine, even if you think you don’t have to. Your seller will thank you.
You must be more careful about accurate pricing on your listings. Do three comparative market analyses, perhaps more if your time frame is stretching out. A listing presentation you go on today, where the seller will take 30 days to prepare the home, will require you to revisit the price before you launch it as a new listing. In a shifting market, this may adjust up, down, or stay the same. What do the new pending listings and sales tell you?
If the seller HAS TO sell, you have to take the listing. Don’t lose it over being adamant about your price. The market still has enough demand that you may be able to achieve the seller’s higher price (within reason!).
Brush off your price reduction scripts. Wait, what? You don’t have any because you’ve never needed them? Yikes! Yes, it is possible in today’s market to actually overprice a listing and have it sit on the market. This is called ‘aspirational pricing’ and is the No. 1 reason we see expired listings every day. Don’t let it happen to you!
Always speak to the listing agent when you’re representing buyers. Find out what’s most important to the sellers. Other than price, what will make your buyers THE buyers? The buyers who are still in the market after higher rates are more serious and probably more qualified. Assume you’ll still be competing for the listing most of the time.
Expect more appraisal issues in some markets. Yes, you can still negotiate appraisal gap clauses, but you need to be even more careful that the buyer can handle the difference, especially as interest rates rise. Expect the gap to get bigger as the market shifts. Lenders are already tightening their requirements.
Expect buyers to be more and more nervous. This will manifest in a shift toward their negotiating power if there are fewer offers on the same property. Inspections will start to matter again. Free seller leasebacks may dry up.
Ask more questions and communicate nearly daily. A nervous market tends to make up stories and create drama when it’s unnecessary. The stress is very real for your clients so be the leader in the transaction.
The market is not about to crash. It may seem like a crash to you if you believe that 40 days on the market is the end of the world. This time is not like last time. Many agents, buyers, sellers, and lenders were not even adults during the ‘last time’ — the crash of 2007-2009. The elements are not remotely the same. Waiting to buy or sell because you think the market will crash is a mistake.
Rates will continue to climb and then stabilize higher than you’re used to or want them to be. However, they’ll still be at historic low rates even if they land in the 6% to 7% range. Get your knowledge updated about adjustable rate mortgages, buydowns, seller financing, and other alternatives to the 30-year fixed. Also, realize that today’s 30-day fixed rate is still going to be better than tomorrow’s or next month’s rate.
Always have the strongest lender letter when you’re representing the buyer. It’s not good enough to just be pre-approved. Your buyer needs to be under loan approval, pending identification of the property and possibly the appraisal — nothing else! Have your lender call the listing agent and speak to their pre-approval and get in state that their ratios, credit, employment and down payment have been verified and are adequate for the purchase price of the home.
Knowledge = Confidence, ignorance = fear. Monitor your beliefs during a market shift. Are they based on facts or are they based on conjecture? Know what’s happening in your own backyard by watching your MLS hot sheets, reading your board of Realtors monthly reports and staying tuned in to your favorite podcast!
Tim and Julie Harris host a podcast for Realtors called Real Estate Coaching Radio. They’ve been professional real estate coaches for more than 20 years, helping agents succeed in many different market conditions.