Does Interest Rate Increases Have You Fearmongering?
Messaging is something that I always look at as a coach. How are other businesses packaging their message that is not only seen by their current and prospective clients, but also the message they are distributing to their fellow colleagues? The big topic right now around the real estate industry is interest rates.
It is likely that soon the Federal Reserve will raise interest rates another 75 basis points. I see many real estate agents in fear of this. While the reality is that some buyers will lose buying power, and that an increase in rates may soften listing prices, it is not the end of the world. I think back to when my wife and I bought our first home back in 2001 when having first and second liens were fairly common. Our first was at 7.5%, and our second was nearly 10%, and that was with great credit.
What has left the building today is looking at historical context. In October 1981, a 30-year fixed mortgage rate reached 18.4%. People were still buying and selling homes. For the real estate agents that placed themselves where opportunity existed, they were still doing deals even in that environment. A large percentage of real estate agents actively practicing in the industry today have never seen a rate over 4 - 4.5% until recently. (BTW - Those real estate agents that pivoted with the way they conducted business in 2008 -2010, they saw significant growth in their business.
Stop putting out the fear, and start putting out the solutions.
What are 5 things real estate agents should be doing today?
- Sharing information about the rates, and also sharing the historical context.
- Identify solutions like buying down points if the desire is to have lower interest rates.
- Understanding the current circumstances of prospective clients. Waiting may not be an option. (It may be a job relocation or loss of job issue. It may be health. It may be needing to size down to something that provides accessibility. There are a million reasons that may not consider a slight increase in rates.)
- Understand that historically real estate increases in price. If you don't buy a home today, you're more likely than not going to pay more in the future. Creating fear amongst buyers may cost them a lot more in the long run.
- If you as a real estate agent are packaging a message that delivers fear, it will push more people away from rather than towards a decision.
Lastly, look who you're getting your information from. With a lot of posts I'm seeing, I can tell these fear messengers are getting their news from the national media. Remember real estate is local. Talk with your broker, talk amongst your colleagues, talk to lenders, speak with title company representatives in your area. Get the information from the ground. It will serve you and your clients better.
As an example, I recently saw someone say that our local market was a buyers market. This was an absolute falsehood. A buyer's market is defined as a market with 6+ months of inventory. The local market here is not anywhere close to that. This does not mean it can't change, and it does mean the wrong message was being sent out into the world. To think that if this person had influence, a lot of people would be misinformed. So make sure you're getting the right information to share.
Your message matters. It first matters to those you serve. Second, it matters to those that want to build a successful real estate business.
Onward and Upward,
Coach Jeremy Williams
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Author: Jeremy Williams is the Owner/CEO of Red Hawk Coaching, and #1 Amazon Best-Selling Author. For more information about coaching opportunities with Red Hawk Coaching, visit www.RedHawkCoaching.com.
