Editor’s Note: The Playbook is a RISMedia weekly segment centering on what brokers and agents are doing to ensure they not only survive but thrive in these challenging times. Industry professionals explain the strategies they’re employing and unique ideas they’ve formulated. Tune in every Thursday for another addition to the series.
The housing market can be a challenging thing for buyers and sellers alike to understand, and the twists and turns we’ve seen in recent years have created a lot of confusion among consumers. They may be more confused than ever on what is up and what is down, and in dire need of guidance.
While we’ve discussed how to mitigate client confusion in a shifting housing market before, there are an infinite number of points throughout the homebuying or -selling process that a client could have questions about—and there are always new ways to learn how to handle those situations. Narrowing down the specific points where clients can get lost in the process can help a REALTOR® solve conflicts before they even arise.
Getting lost in the meaning of the market
Numbers can cause just about anyone to get lost, especially the numbers involved in real estate. With mortgage rates and home prices growing and growing, but now possibly beginning to lower, many clients are lost in regard to what these numbers mean when it comes to buying or selling a house.
Janice Corley, managing broker of RE/MAX Collection Premier in Chicago, Illinois, has seen firsthand the confusion among clients about the relationship between property values and interest rates.
“Clients are confused about if now is a good time to buy because of the interest rates and how they will affect the values of the purchase,” explains Corley. “They do not want to get stuck with a property that will not hold its value.”
Interest rates are not an easy thing to understand for someone on the outside of the market, and even sometimes for those involved.
“We educate our clients to understand that the interest rates will not affect the value of their property and that they get the write-offs on their taxes when owning properties. When properties are purchased they are appraised, and the value is there before you close, the thoughts of decrease are protected,” says Corley, who takes the time to explain the meaning of interest rates to her clients.
“In my opinion, real estate is still the best investment one can make,” adds Corley. “Even if clients pay more interest, it’s a 100% write-off, and the rates are not so high that it eats into the value.”
Where to turn, who to trust
The market has been through many shifts since the pandemic, putting clients—potential or current—on edge. Lyman Magee, COO and REALTOR® for HomeSmart ICARE Realty in Roseville, California, says he has seen a lot of clients feeling unsure and confused about what the truth is when it comes to the current state of the market.
“Both sellers and buyers are confused on whom to listen to, believe and trust right now,” says Magee. “Between the media talking about inflation, job layoffs, higher interest rates and other negative issues, I believe they are scared to make a move and to make a bad decision.”
2022 especially saw a lot of change in the market that took over a lot of the news, which would put any client in a state of worry and distrust. The job of a REALTOR®, Magee says, is to be there for clients, to show them you’re a trusted source of information who can work with them to achieve their goals.
“We are here to coach people on how this market can be a benefit to them depending on their needs,” explains Magee. “If a homeowner has a want, but not a need, to sell, then it is about breaking down the pros and cons to selling and buying in this market.”
In the current state of the market, Magee explains that one particular con he talks a lot about with clients is the current rate of inflation and talks of recession. He feels that a con would be to sell a home when there is a low interest rate and an affordable payment when the sellers don’t have a “need” to sell their house.
“As an advisor to our clients, it is critical to work with them to assure their finances will allow them to afford a higher interest rate and payment without causing them stress in the economy we now see ourselves in,” says Magee.
On the brighter side, Magee goes on to explain that a pro associated with higher interest rates is that they can benefit a buyer to help offset their taxes at the end of the year. “A client may be able to buy their next home at a very good price, which could offset the higher interest rate,” he says.
“It’s important to take each client’s situation into account and help them assess if making a move now is in their best interest,” adds Magee.
More tips and tricks of the trade
As experienced REALTORS® and as leaders in their respective brokerages, Corley and Magee have plenty of knowledge and experience to share when it comes to communicating with clients and talking through any areas of confusion and/or questions.
Corley’s No. 1 tip for communicating is to be direct, no matter how hard or emotional the conversation could be for your client.
“While you have to manage expectations through text, I believe verbal communication and following up with an email is the best way,” explains Corley, “as it can be hard to understand emotions through texting. And always talk through negotiations and objection handling over the phone.”
As for Magee, his big tip is to foster a safe space for open communication to breed honesty and understanding.
“Seek to understand before being understood is important here,” says Magee. “I believe that if I give them a safe space to share their issues or concerns, it will open honest dialogue, which will help both sides be able to come to a resolution that’s best for them.”
One thing Corley and Magee both agree on is the importance of always learning when it comes to working in real estate.
“Be a student of real estate,” says Magee. “I believe it’s important to take classes, sit in seminars and read up on economic data so you can give informative information to the best of your ability.”
“You need to be knowledgeable about what you are doing. Real estate is a life of learning, and quick glances do not serve your clients,” adds Corley.
Key takeaways
- The relationship between property values and interest rates can be confusing, so REALTORS® should take the time to explain to their clients the meaning of these numbers, and the benefits they can bring to the table.
- Clients are confused as far as whom to trust, and REALTORS® need to show them that they’re a trusted source of information and break down the market’s current state and the pros and cons to buying and/or selling in any given market.
- Be direct, and call on the phone for important conversations.
- “Seek to understand before being understood.” Be a safe space to communicate issues and concerns.
- Keep learning, and always “be a student of real estate.”
