Many exasperated home buyers prayed for relief from the past two years’ intense competition and bidding wars. Finally, it seems that they may now be getting their wish, but it comes with skyrocketing interest rates, high housing prices, and talk of recession.
Going down a path of negativity will not help your home buyers weather the storm of a changing market. So, let’s consider the opportunities that allow your clients to still realize the home of their dreams.
Marry the house, and date the rate.
Overwhelming demand is finally easing up, and inventories are rising from record low levels. Realtor.com® reports the June 2022 national inventory of active listings increased by 18.7% over last year, the most significant margin since the data was recorded. As a result, you can partner with your clients to find a great home with less competition.
Once your buyers settle on a home, it’s time to discuss the elephant in the room: mortgage rates. Even though rates rose sharply in the short term, they did so from historic lows of about three percent for a conventional mortgage. So even if your buyers lock in a rate now, it is still lower than the rates of eight percent and higher from the 1980’s to 2000. Better yet, your clients can refinance in the future when rates come down.
So yes, NOW is the time to buy!
Affordability Concerns
Many first-time buyers don’t see affordable options. While this is a confusing time, buyers actually have more opportunities, with some of the competition opting to wait it out. As a result, your clients may have more time and negotiating room with sellers when making offers. With less competition, bidding wars aren’t driving up prices above asking as they were over the past year. With little clarity on interest rate dynamics, it may be wiser to encourage buyers to act now if the right home comes along.
Make sure you constantly communicate with your preferred lender on the best products available for your buyers’ needs. For example, an adjustable-rate loan with a lower monthly payment may best suit your client’s budget. Also, consider if your buyer qualifies for an FHA, VA, or another low downpayment product.
All this talk about a Recession
We don’t have a crystal ball to predict what the future holds for the economy. However, historically the value of residential real estate has withstood previous recessions. The current market is particularly unique because homeowners have accumulated record levels of equity as housing prices grew dramatically. In fact, negative home equity is close to zero. So even if a recession hits and home prices drop, property value will not be wiped out. Additionally, mortgage rates trend downward during a recession, so opportunities to refinance loans locked in at a higher rate now will become available.
NOW is the time to reach out to past clients and your sphere of influence. Educate them on why this is a great time to buy a home with you!
With the market changes, you need to be prepared to answer your clients’ questions about mortgage rates. NOW is the time to stay ahead of the curve and show your clients that you are the market expert! Here are three conversations you need to prepare to answer your client’s concerns.
This resource is just one example of the top-notch educational materials Fathom offers free of charge to our agents. Fathom is committed to helping agents reach the level of success they aspire to achieve, even in this crazy housing market! So what is your brokerage doing for you?
If you are thinking of making a brokerage change, check out www.fathomcareers.com
Encompass Lending Group, a Fathom Holdings, Inc. brand, offers residential loan services, including home loan and refinancing solutions. Encompass strives to provide top-notch service through simplifying communication, high availability, and concierge customer service.
Learn more about Encompass Lending at www.encompasslending.com
