Home prices are up, consumer confidence is down. Inventory is low, mortgage rates are high. The undulations are enough to make your customers’ heads spin. (And yours!)
RISMedia asked real estate brokers to identify what single challenge they saw as most significant to the industry in 2023, as well as how confident they were in overcoming that challenge. RISMedia reported, “[Lower] inventory was the overwhelming choice, with nearly half (47%) seeing a lack of homes as the main obstacle for real estate practitioners this year. Mortgage rates came in second, with 33% of brokers worried about the cost of borrowing. Next was affordability at 16%, followed by inflation at 4%.”
How can you address housing market trends like these to keep clients satisfied and business strong? Weichert® is here to help with tips for managing these fluctuations and turning them into opportunities — aka, the silver lining. Let’s start with the “lows.”
Tips to manage lower real estate inventory:
- Be prepared to fight a little harder on your customer’s behalf. Sharpening your negotiation skills or fine-tuning your comfort level with bidding tactics like escalation clauses, may help you keep your customers in the game without ending up in a bidding war that often leads to buyer’s remorse.Help your customers make good decisions. This is where having a true partnership will go a long way. Understand their needs and goals and find solutions that best meet these parameters, even with the market challenges.Leave no stone unturned. Be part of the solution for increasing real estate inventory. Knock on doors, reach out to old customers, and network every way you can to generate leads and listings.
Consumer confidence is an economic indicator that measures the degree of optimism in the market. It stems from a macro view: the national or even global economy. It also derives from a micro view: a consumer’s personal economic situation. Gauging consumer confidence is pretty simple: it typically increases when the economy is strong and decreases when the economy is not.
Tips to turn low consumer confidence around:
- Exude your own confidence. This includes your team, too. Remind customers that “you’ve got this” and that you’re there for them to navigate any fluctuations in the market.Be super transparent. Honesty leads to trust, and nothing is more important to your customer relationships than trust.Share recent customer experiences. As people, we find comfort in knowing that others have successfully found a way around what concerns us. Put your customers at ease by leading with recent outcomes from other customer experiences.Sharpen your saw. Remember to keep up the good work that makes you the professional that you are: workshops, education, networking. All these learnings strengthen your skills.
Now, let’s turn our attention to the “highs.”
The reality of higher mortgage rates translates to higher monthly payments. Factor in higher home values and all that can equal even higher monthly payments that many consumers are not eager to commit to.
Tips to address higher mortgage rates and higher home values:
- Remember that there’s less competition. Higher interest rates can equal less buyer competition, which may also force home sale prices down. This can open up more choices for buyers.Consider that there’s less buyer risk. Last year, buyers waived contingencies, including inspections and appraisals, to stand out to sellers. Now that the market is evening out, these contingencies are heading back to normal.Talk about the refinance option. When appropriate, remind customers that they can refinance when rates come down as long as income and credit scores remain strong.Help customers develop alternate plans. For example, would your customer consider a different purchase, one with a rental opportunity? According to Statista, “In 2021, there were approximately 44 million housing units occupied by renters in the United States. This number has been gradually increasing since 2010.” There continues to be a real need for rental properties, and this approach might offer some customers a creative approach to achieving their real estate goals. Again, it all boils down to knowing your customers.
At Weichert, we view these highs and lows of the market as a normal part of doing business. Our resources, tools, and support are designed with these variables in mind, so that broker-owners and agents like you can continue to serve your clients and prosper in your business no matter what the market looks like.
When you’ve been in business as long as Weichert, you know that you can weather all kinds of markets. Learn more about how Weichert can guide and support you in any environment.