The real estate market has shifted dramatically. The number of transactions has dropped, inventory is getting higher, and buyers have become more reluctant.
Fear is rampant, and anxiety is high as we enter 2023.
The great irony of a buyer’s market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. Buyers now have more leverage than ever, but the media becomes the excited purveyor of negative news, and buyers buy it all.
To real estate agents, it feels like that’s the only thing they’re buying.
It’s ironic. Not long ago, buyers were incredibly excited about buying houses. It was a seller’s market; prices were escalating. It was perhaps one of the most difficult times to buy value, and yet, people were buying like there was no tomorrow. Buyers were afraid of losing out. So, when a shift occurs from a seller’s to a buyer’s market, what happens? Fear is still in the driver’s seat, but the tables are turned, and the fear of paying too much stops most buyers in their tracks.
There are two types of buyers in regard to timing; those that believe they can time the market and those who believe that the timing will find them. History supports the latter; if you’re always in the market, although you may never sell at the highest peak or buy at the absolute bottom, you can always do well over time.
As a leader in real estate, what do you say to your agents who are seeing the current market and getting scared? You need to help them see what’s really going on. Tell them to look at the advantage that their clients now have. Sellers will have to behave better. They’re going to have to fix the house up, make repairs, stage the home, price it right, and be willing to negotiate when an offer comes in.
Home values will most certainly continue their 50-year trend of appreciation. Over the last 30 years, real estate, on average, has increased 7% to 9% every year. Remember that equity builds up through mortgage debt paydown, which is a proven path to wealth. Usually, the bigger gains are made from holding on over the long term. What did you pay for your first home if you bought it 15-20 years ago?
It’s important to help your clients stay in touch with that so that they don’t wait and try to time it and then lose out because interest rates go up or the pricing goes up. You’ve got to ask your great client questions to find out what compelling reasons are behind their decision. Ask them, “Why are you thinking about buying? Tell me more. When you get into your new home, what will that do for you? What will it mean to you? What will it mean to your family?” Tap into their big need! Help them see the possible outcome of their decision.
Timing will catch up to the current market. It may not be at the very peak to buy or sell, and it might not be at the bottom, but there’s a safe zone. If you guide your client to stay in that safe zone instead of trying to time it at the lowest or the highest and just get in the game, over time, the property value will rise.
Bottom line, you need to help your clients stay okay with what’s going on and keep this market shift in perspective for them so that they don’t miss out. Help them to stay level-headed about what’s going on rather than misinformed and emotional. Remember, our job is always to help them make great decisions that they will be happy about in the future. Remember, As a professional Real Estate trusted advisor, it is our fiduciary duty to present the real estate opportunity with real data and our interpretation of that information.
Scott Agnew is the author of Long-Term Leader.