RISMEDIA, May 26, 2010—The various government stimulus packages helped real estate agents across the country create a sales momentum this spring. Now that the Federal home buying tax credits have ended, it’s even more important that we all work together to keep home sales on the rise throughout the summer and into the fall. As such, what you do during the next 90 days will have a major impact on the success of your real estate career throughout 2010 and into 2011.
To help you maximize your opportunities this summer, here is the 5-step action plan that you need to implement immediately. Doing so will help boost your career and your bottom line.
1. Sharpen your axe
To thrive in today’s market, you need to identify opportunities and act upon them immediately. In order to guarantee this, you have to be mentally sharp. Therefore, like a lumberjack, you need to occasionally take the time to stop chopping and sharpen your axe, which in this industry is your mind.
So go ahead…take a planned vacation this summer. Enjoy your friends and family. Dive into something you have always longed to do. This much needed downtime will give you a fresh focus and will guarantee that you will be able to work at maximum efficiency throughout the rest of the year.
Realize, though, that the advice isn’t to take the summer off. Don’t spend weeks daydreaming about the vacation before you go. Don’t spend weeks reminiscing about the vacation once you return. Work hard until the first day of this well earned time off. Before you leave, put together a plan that you will be able to enact immediately upon your return. Then, escape and forget about real estate. Truly enjoy yourself for the time you are away. But, get right back to work the day you return to the office.
2. Realize there is a difference between cost and price
People are ready to buy again. Consider these recent findings:
-A recent Gallup poll reported that “Lower but stabilizing home prices combined with continued low mortgage interest rates have persuaded 72% of Americans that now is a ‘good time’ to buy a house.”
-The Survey of Affluence and Wealth in America reported that 19% of the wealthiest people in America “say they are ‘in the market’ to acquire real estate.”
-A Move, Inc. survey found “17.2 percent of potential home buyers today say they plan to purchase a home in the near future as an investment compared to just 5.6 percent in March 2009.”
-Reuters reported on April 28, 2010, just two days before the tax credits expired, that “Home buyer tax credits have been a boon to the U.S. housing market, but their expiration is unlikely to deter home purchasing activity as consumers grow more confident.”
What is preventing all these would-be home buyers from taking action and making an offer? Fear!
Fear always comes from a lack of understanding. But fear is only the symptom. The lack of understanding is the disease. Many real estate agents have been trying to make people feel better by underplaying the severity of the market (treating the symptom) instead of educating them to the reality of the market (treating the disease).
You need to help buyers realize that waiting for a lower price might work against them in an environment of volatile mortgage rates. Therefore, the buyer should be less concerned with the price of the home they are considering and more concerned with getting the best cost (home price plus expense of financing).
Home prices have fallen to pre-bubble prices. Nationwide, prices are back to 2003 levels. However, the cost today is much less expensive than it was then. How? The annual average commitment rate on a 30-year mortgage in 2003 was 6.26% compared to the much lower rates today. Even though the prices are the same as in 2003, the cost today would be significantly less because of this rate difference.
Once you simply and effectively communicate the reality of the market, you can easily point out the opportunities that exist and help your buyers accomplish their goals. So search out the buyers mentioned above and help them understand that the move they are considering is not only possible, but also in the future it will be profitable.
3. List the property at a compelling price
The sale of a home can be a very emotional time for a seller, as they often have fond memories of people and events that graced their home over the years. However, when you are helping a seller set the price, you need to make sure emotion plays no part in it. The value of any item in any industry, whether it’s a home, a car, clothing, or anything else, is determined by only two variables: the demand for the item and the supply of that item.
At best, demand will remain stable throughout the year. If anything, potentially higher mortgage interest rates could soften demand.
The supply side of the equation is much clearer. A recent Zillow.com survey shows “8% of homeowners, or about 10 million Americans, are ‘very likely’ to sell if and as local conditions improve.” Obviously, not all 10 million will come to market. But even if only one quarter does, that would be 2.5 million additional homes for sale.
Additionally, recent foreclosure statistics show that between 5-7 million homes are eligible for foreclosure. Prices will be impacted severely when this discounted inventory begins to come to market as the year unwinds. Therefore, help your sellers price their houses properly now to avoid further reductions that will occur later in the year.
Now the next logical question is: What should you do to prepare for this wave of foreclosures? Here’s the answer…
4. Become comfortable with distressed properties
More and more families are finding it very difficult, if not impossible, to keep up with their monthly mortgage payments. They are trapped in a vicious cycle that is creating a tidal wave of distressed properties coming to the market.
It is your duty to help these people. Commit to becoming better informed as to the programs available to these families in order to assist them as a true real estate professional should. Get certified by taking the short sale/distressed property classes offered by your local and state associations. Then, allocate a portion of your weekly work schedule to assisting this rapidly growing segment.
The more neighbors you help avoid the nightmare of foreclosure (through either a modification or a short sale), the better off they and your neighborhoods will be. Vacant foreclosures are what drive down values in a community. Modifications and short sales avoid this situation.
Help your neighbors in order to save your neighborhoods. Yes, this is a rather simple concept, but it won’t be easy unless you…
5. Develop the heart of a teacher
Dave Ramsey, the writer, radio personality, and financial guru, said: “When getting help with money, whether it is insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman. If you find someone with the heart of a salesman, run away.”
Stop trying to sell people and instead educate them to the best options for their situation and their families. Take the time to truly understand what is happening in the current market as well as why it is happening. Then and only then will you be able to simply and effectively explain it to your customers and clients. Until they truly understand their options, they will be afraid to move forward.
Plan Now; Get rewarded later
Real estate is still one of the best professions in the world. The key to being successful is having a solid plan and then following it to the letter. So make sure you set your summer plan now! With your plan in place, anything is possible.
Steve Harney is a residential real estate expert who specializes in sales and leadership training. He has over 25 years experience as an agent, manager and company owner. You can receive monthly success strategies from Steve in your inbox by signing up at www.KCMquickreport.com.