By Barry Paoli
Despite our current situation, I still predict that motivated buyers will spark the real estate market and speed the needed upturn. In order to help with this process, we need to give these buyers hope and reasons to buy.
To get everyone ready, I’m reminding our 100 agents at Century 21 McMullen about existing opportunities and programs, while asking them to convey optimism with logic and fact. With the right tools, today’s agents can counter prevailing worries and tell prospects: “It’s a great time to buy a home.”
There are a lot of ways to assure your clients that now is a good time to buy.
First of all, let them know that prices in many areas have declined 10 to 20 percent, and are sometimes down to 2001 levels. For the buyer, this reduces the purchase cost and makes a lot of formerly “overpriced” homes suddenly available.
Secondly, remind them of all the great financing programs that are available. For example, most sellers will offer buy-down mortgages where they subsidize the difference between market rates and the attractive buy-down rates of 4.5 percent the first year, 5.5 percent the second year and 6.5 percent for years three through 30. And in contract sales, if the seller doesn’t need the money, he/she can take a smaller down payment, hold the financing, act as the back and receive regular mortgage payments from the buyer.
Additionally, many traditional lenders will extend themselves to make the loan as simple and favorable as possible. Numerous qualified buyers making 5 to 20 percent down payments can receive 6.25 percent to 6.5 percent mortgages today. Since many risky lending practices of the past have been eliminated, this gives buyers more confidence in the process.
Another important option is short sales. If the seller has a $350,000 mortgage outstanding and lists the home for $320,000, the lender may absorb the rollback or difference. This is not guaranteed and there may be dickering over commissions and closing costs, and it often takes 30 to 60 days for lender approval or rejection. However, short sales do happen and they help move homes.
Another tactic for a good agent is to immediately use accurate comps — not those of recent times, but comps from four or five years ago. This provides more realistic values and helps more buyers afford the homes they want.
Lastly, investment-wise, it’s a great time to buy a home someone will live in. Prices are down significantly, often $60,000 on a $400,000 northwest home. Whether prices will decline further the next few months or not, any buyer taking a long-term perspective will do well because prices are low now and will rise over the long term. Investors may wait for some magical true bottom, and those burned by flipping are out of the market. It is important to remember that families seeking homes to live in can profit long term.
In today’s challenging market, I give agents positive ammunition and urge them to go “back to basics.” This means working every call harder than ever before. It means knowing the marketplace extremely well, even better than buyers who do extensive Internet research. It also means having good lenders ready by having all the tools and information prepared, educating buyers to make down payments and marketing harder than ever by chasing expired listings and FSBOs, knocking on doors and fervently selling oneself.
Despite a changing real estate market, there are opportunities and reasons for success. Today’s dedicated agents will follow these opportunities, continue selling and be stronger when the general upturn takes place.
Barry Paoli is president of Century 21 McMullen, a 62-year-old company with 120 agents. He can be reached at 773.631.8300 or [email protected]
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