Last year was one of whiplash change for many agents — a rapid rise in interest rates cooled some of the demand for housing in Chicago, along with much of the rest of the nation. Real estate agents also navigated higher construction costs, an ongoing inventory shortage and the shift away from historically low mortgage rates.

Despite those changes, top producers continued to find the best deals for their clients and help them succeed in the housing market as demand remained high.

Beth Repta, founder of Repta Realty and one of the co-CEOs, along with Joe Zimmerman of Zimmerman Ryan + Boenzi, in the newly formed Keller Williams team Livian Chicagoland, said that with the market cooling, her team now spends two hours on lead generation each day.

“It’s very stringent, and you record your numbers,” Repta said. “There are no interruptions. That is the protocol for the team, and I think that really helps because it gives us a time that we’re super focused, and we don’t let anything else get in the way. We don’t let managing transactions get in the way of that time slot. We have three admin staff, so we think they can take care of that while we’re generating leads. We’re very stringent that it’s two hours a day, we know who we’re calling each day and we stick with that.”

Zimmerman stressed consistency as the key to success in a down market, citing the coaching philosophy of legendary UCLA men’s basketball coach John Wooten as a guiding principle.
“[Wooten’s] coaching strategy with his players was, ‘Learn how to tie your shoes first,’” Zimmerman said. “I like to rely on the fundamentals and stick to the fundamentals. The fundamentals just have to be enhanced in different markets. The market that we just came from shifted up until it shifted down. Sometimes people got away from the fundamentals because of how quickly things were selling. Now with it cooling off a little, if we all could just sit back, focus on the fundamentals and literally just focus on selling a house, the real estate market would be in a much better place.”

Michael McCatty, of Century 21 Circle in Orland Park, said it’s not his approach to business that changes during a downturn, but merely the details. He focuses on building relationships and has repeat clients going back to 1999 telling him they know he will do whatever it takes to exceed their expectations. He also draws on his own experiences as a homebuyer.

“I have been helping clients buy and sell real estate professionally since 1999,” McCatty said. “Prior to this I have always loved homes. It is evident in my over 15 moves and rehabs. As a result, I’ve seen a lot of market changes, and I’ve experienced a lot of tricky deals that help me to guide my clients.”

Grigory Pekarsky, managing broker and co-founder of Vesta Preferred Realty, believes in working referrals and building relationships during a downturn.

“We start with the relationship being above all the most important thing,” Pekarsky said. “We’re actually doubling down on what has made us the success that we are, digging in deeper with the relationships with past clients and current clients.”

Silver linings and surprises

Pekarsky keeps his team focused on “moneymaking activities” during a cooling market. Buyers who are raising cash are still in the market, he said. Higher interest rates mean fewer offers are going up on properties, giving those cash buyers better deals.

“Those are things you’re doing on a daily basis, on a continuous basis, on a consistent basis, because all success is meaningful activities done consistently over a long period of time — cooling markets, hot markets, it doesn’t matter as long as you’re doing the right things every single day, keeping the right focus,” Pekarsky said. “You’re going to be in front of enough decision-makers that you’re going to continuously have a consistent business.”

Repta said her clients are finding they can take a breath before writing an offer, now that there are fewer buyers competing for homes.

“They don’t have to make split-second decisions, so that’s very nice,” Repta said. “A lot of people that were waiting on the sidelines, like a lot of people that had to sell before they buy, they now can make a contingent offer. I like the fact that they have a minute to breathe and to really sit down and make a sound decision for themselves instead of being bull-rushed.”

McCatty said it’s surprising that home prices have not fallen significantly since rates started going up. He is also finding that his clients have more time to consider their offers on properties, and they have room to negotiate with sellers.

“Many times throughout the year, people believed home prices were rising to a point that could not be sustained, but so far, while we have adjusted somewhat, many homes have maintained a lot of the increase,” McCatty said. “Clients have a little more time as buyers and are no longer competing with numerous other buyers for the same property. Some homes actually sell at or below their asking price. Buyers have more negotiation power.”

Zimmerman noted that agents with whom he collaborates have a “pipeline of buyers” who are still looking for the right home. Those clients are largely driven by media hype regarding the tight housing inventory.

“The media drives a lot of mindset to the industry and to the profession,” he said. “The beautiful thing about it is in the scarcity mindset, we do win that fight. And right in all of this is that homeownership is still amazing. It’s still the best thing to do. And there’s still a pent-up demand, and people want to buy home.”

What’s in demand

McCatty is seeing demand for homes across the region. Pandemic trends that emphasized outdoor space and work-from-home flexibility remain hot.

“There is more interest in investments again with the cooling market,” McCatty said. “There is more interest in home offices as the work-from-home group continues to be more popular. Also, a yard, because many have added a companion as they have more time at home. I think we will see this continue.”

Single-story homes and smaller spaces for downsizing clients have been in demand lately, according to Repta.

“I have a lot of clients that are just looking for ranch homes that are not necessarily inside of over-55 communities,” she said. “They just want single-story living, and it’s hard to find. We also have people that are downsizing and wanting nice townhouses to move into that are near walkable to a downtown. That’s also hard to find.”

Pekarsky’s clients are looking for homes that are ready to move in and are emphasizing the homes themselves over the location.

“The internal space is so much more a part of people’s decisions,” he said. “They want more space, they want more open space and people don’t want to do any work. They just want to be move-in ready on average. People want more open spaces, more sunlight, more square footage. The nicer the place, the easier the sell. People’s focus is a lot more internal than just, ‘I want to be in this neighborhood.’ It’s the house, and then they look at the neighborhood.”

Bringing in new buyers

Zimmerman encounters a broad spectrum of buyers in the current market who are experiencing a fear of missing out even with higher interest rates.

“Your job as a Realtor is to create FOMO (fear of missing out),” he said. “How you do that is just obviously preparing the subject correctly and pricing it correctly. You are still seeing FOMO across the board, from first-time homebuyers to empty nesters to second homes. And because we’re in a Pinterest market, as soon as something’s priced correctly and shows well and has the up-to-date finishes that people are looking for today, you might not get 15 offers, but you’re likely going to get two or three.”

Repta feels first-time homebuyers anxious about rising interest rates are indeed missing out.
“I think they are sitting on the sidelines and keep hearing about interest rates,” she said. “The sad thing is that in doing so, that you’re going to pay $1,500 a month in rent while you wait. You’re just essentially throwing away a down payment while you wait for rates to drop, even though you could get in and get equity and then refinance.”

Pekarsky expects to see more first-time homebuyers entering the market as interest rates continue to stabilize and rents keep rising.

“We always had a ton of first-time homebuyers naturally coming over from the rental side of things many years ago, and I became an expert in representing first-time homebuyers,” Pekarsky said. “This year it’s already coming out that the interest rates should be at least semi-stable. We should get more buyer confidence.”

McCatty also expects more first-time homebuyers to enter the market. “The rates have cooled this down for a bit, but I think moving forward we will see more,” he said. “It is a great opportunity for first-time buyers, because while the market was hot, they may not have had the financials to compete. With a slower market, they have a little more negotiating room and sometimes even some ways to help with financing.”

To bring in homebuyers, Repta has evolved her messaging to emphasize that real estate is, at its root, a local industry.

“Real estate is so hyperlocal, and all we hear is everything that they talk about in the news on a national level,” she said. “I service Cary. It’s a small town up in the northwest suburbs, and there are no homes for sale between $450,000 and $650,000 in the whole town. Everyone’s like, ‘Oh, it’s the market, it’s cooled.’ But wait, there’s still an opportunity. There’s no competition in a $200,000 price point. So, I think the message is letting the Realtors look at the data and let the data tell the story about that very hyperlocal market.”

Expert Sources:

Mike McCatty
Founder, Mike McCatty Group, CENTURY 21 Circle

Grigory Pekarsky
Managing broker and co-founder, Vesta Preferred Realty

Beth Repta
Co-CEO, Livian Chicagoland – Keller Williams

Joe Zimmerman
Co-CEO, Livian Chicagoland – Keller Williams