Latest / The Real Estate Agent Playbook / The Agent's Role in High-Rate, High-Price Markets

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The Agent's Role in High-Rate, High-Price Markets · The Real Estate Agent Playbook

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  I get it, I have Agents all the time being like is now really a good time
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  to buy and the minute that you set down That confidence and your ability to
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  provide value for your clients And you're unsure of the market and unsure of how
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  to advise people properly That's when you set down your ability to be your
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  very best and step up in a time of need.
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  We're going to go into all of this.
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  We're going to talk a lot about the market, the high interest rates, the
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  high appreciation, the high prices.
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  So stay tuned.
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  What's up guys.
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  Jeremy Kane, real estate agent playbook.
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  This one is something that I get often from my agents and sometimes I felt myself
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  like is now really a good time to buy.
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  And.
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  I pride myself on being able to just advise, provide the facts, stick to the
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  facts, know the facts, know the market.
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  And that's exactly what we're going to talk about as we always do.
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  So if you like what you hear, please like comment and subscribe.
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  If you're listening over on the podcast, please share this episode with your
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  favorite real estate agent, because we're looking to grow that community as well.
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  And I'm forever grateful for all of you.
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  All of you guys out there on social.
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  So let's kind of talk about this.
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  And first and foremost, we have to get an overview of the market conditions.
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  I'll give you a quick one, but you should know your hyper local market for sure.
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  In Denver, we've seen record appreciation over the last four or five years.
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  The last year or two going on 18 months, we've kind of seen high interest rates
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  kind of creep in and that has really stagnated our price appreciation.
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  I think last year we were, you know, two or 3 percent up overall.
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  And you're talking median and it's a little less so, you know, for the most
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  part we're pretty flat, which is okay.
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  Especially considering what we've gone through over the last, really, 10 to
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  15 years, in our real estate market.
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  And so, if that's what's been going on in your market, which I assume it
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  has, because those lower interest rates really jacked up the price, we're now
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  left to sit here and be like, okay.
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  We have this crazy appreciation.
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  The cost of living is, is going up.
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  The cost of milk is high.
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  The cost of everything's high and the cost of the mortgage is high.
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  Imagine that.
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  And so as we continue to break that down, it certainly, puts people in a little
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  bit tighter spot, when we're talking about it, but here in our market, when
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  compared to rents, sure, your mortgage is going to be maybe two, three, 400
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  higher than your rents, but people are making rent happen like crazy.
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  And you really have no control over it.
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  And so those rents tick up just as, just as the mortgage prices, just as the milk
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  prices, everything kind of ticks up.
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  And at the end of the day, we have to have somewhere to live.
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  We have to have a roof over our head.
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  And so as an agent, if you take a step back and you're like,
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  okay, my job's to help people build wealth through real estate.
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  My job is to help people make positive decisions.
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  Now, certainly we're not going to be in a market where.
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  This is going to be the greatest investment that doubles, you know,
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  when you take a 250, 000 house and all of a sudden it's 450, 500, 000
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  in a few years, like that, that's not realistic and that's not real.
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  And we can't sell that.
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  But what we can sell is a, a super secure, shelter over people's
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  heads that traditionally is.
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  In our market has appreciated between four and 6%, on the dot over 60
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  years, pretty good investment, pretty safe place to lay your head.
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  And so that's where we have to really talk about it.
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  But in your market, those numbers might be different.
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  So really dial in those numbers and just have that as a matter of
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  fact, what we have done recently.
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  Is really look at the investment and we talk about it and the appreciation
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  and getting in and being able to get all your mortgage insurance off, you
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  know, in a year or two when it should take seven and, and all of those things.
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  And we, as agents don't really know what to do, right?
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  I've coached agents who are like, I'm actually not.
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  Super excited to make that call and pick up the phone and, and
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  have the conversation that their house hasn't appreciated X, Y, Z.
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  Well, step back and understand that right in that moment, that's when you're
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  able to be a resource to those people.
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  That's when you are most valuable when the decisions are harder, not when.
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  You know, you can get into a house and it, you know, appreciates and,
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  and everybody's happy and you can get, you know, your mortgage insurance,
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  you can get, you know, you have 20%, you know, loan to value immediately
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  and all the things like that's not really, and truthfully, that wasn't us.
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  That was us just winning the bidding war to getting him in the
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  house and then the market took it.
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  So don't own it 100%, don't own the market, right?
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  It wasn't your fault that they made so much money.
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  It also isn't your fault when they.
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  Don't make any money or they maybe lose a little because, you know, if they
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  picked you up and called you right now and, you know, said, I need to sell
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  this house, I just bought it last month.
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  Well, there's no way that they're going to make the money after the
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  fees and all that stuff, in reality.
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  And even in those crazy markets, they didn't.
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  So kind of take a step back as an agent and just be a resource for people, talk
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  them through it, counsel them through it.
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  If it's, you know, a divorce or, you know, they absolutely cannot stay in that house,
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  for some reason that life came along.
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  Like help them rent it, look at their options, right?
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  People did actually used to take a loss when they, when they sold the
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  home, not to say that's great, but in case of a life change like that, and
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  they have to make a move, well, let's, let's exhaust all options, right?
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  Head on over, try and try and rent it out for what you're.
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  You know, paying.
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  And right now the problem is that you can't rent your house out for probably
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  what a zero down payment mortgage looks like, especially the next day.
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  So you're going to have to do some things.
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  You're going to have to figure out when the rates go down, refinance, and then
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  those properties become, you know, break even or cashflow properties, but you
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  can't promise those things up front.
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  And so know that, and know getting into it, but also be
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  a, be a problem solver, right?
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  At the end of the day, the buyers make a commitment to pay that
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  loan at that amount for 30 years.
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  Whatever they have to do to make that happen, they can do it.
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  You don't have to rent your house out so it cash flows or,
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  you know, covers your mortgage.
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  If it's that dire of a situation, maybe you're taking a hit.
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  In fact, on my first rental, when I moved out of it, I was a terrible tenant,
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  and there needed to be a lot done.
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  There was somebody that was building a house in the, you know, canyon
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  above, you know, Fort Collins.
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  He wanted to move in.
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  He said, this is what I can afford because this is what I'm doing, but
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  I will, you know, take care of this.
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  We'll get new carpet in, we'll paint, we'll do a lot of things.
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  So he's using some of his extra supplies from his house to better my home.
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  I paid for that.
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  Right.
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  I paid in the form of covering the mortgage and the difference.
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  He was a great tenant, completely turned that house around for me.
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  And so there are options, right?
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  Sometimes we get so caught up in this, you know, we have to cashflow.
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  It has to be this.
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  It has to be that there's so many benefits to home ownership.
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  And so when we, as agents are like, Ooh, it's a high, high interest
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  rate, high price market, like, it's, it's just not a good time to buy.
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  Well, Like if you're renting in my market, you're throwing
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  away 000 a year to nothing.
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  If you get into a, if you get in a home, maybe you have to have roommates and
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  they're helping you out, you know, but if you're going to rent with roommates,
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  I mean, maybe, maybe this works.
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  Maybe that's an option.
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  Right.
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  So you gotta be very particular.
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  You have to focus on affordability.
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  I don't know how many times I've said, you know, call this lender,
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  talk to him, but make sure you're talking about your monthly payment
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  and what you're comfortable with.
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  And granted, a lot of people are like, Hey, I need that
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  payment under a thousand dollars.
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  Well, that's not realistic, right?
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  But we have to work through this.
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  We have to make some sacrifices, maybe slow down on the Starbucks
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  or, you know, the gaming memberships or whatever that is.
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  And we can get in to get you a new home.
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  So as an agent, we have to be able to counsel.
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  We have to be able to talk.
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  If you notice I'm not selling a property, I'm not selling a house, right?
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  Look at it, make sure that, you know, it's in the affordable range, make sure that
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  it fits all of their must haves, whether it's rooms for kids or extra bathrooms
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  or whatever, and be that resource to help get them to the finish line.
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  On that house that they choose and yeah, it's, it's expensive.
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  I tell people all the time, there's not a time in the last three or four years that
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  I've seen a mortgage payment come across the closing desk that is less than mine.
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  And I have a 3, 600 square foot house in this nice suburb in Denver, right?
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  And so that's where we have to really focus in and be like,
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  okay, what's this look like?
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  What's the outer world look like?
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  What are they used to paying for rent?
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  Yeah.
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  And you're talking through this and you have to bring in the benefits, right?
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  The benefits are no longer that it's going to double in value in
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  three, four, five years, right?
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  That those days are gone.
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  The low interest rates are gone.
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  It's also not really a benefit that, Hey, yeah, we can.
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  Offer 100, 000 over and this is only going to affect your payment this much because
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  the interest rates this like those days are gone So let's really look at it.
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  Let's see what we're doing right because if we can educate and communicate
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  the properly There's all kinds of resources There's money and concessions
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  that we can build in to the offer that'll get the interest rate to an
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  affordable rate They'll make sure that that mortgage pays off Payment
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  on the monthly is obtainable, right?
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  And it might not be uber comfortable, but can you do it?
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  Can you commit to doing it for 30 years?
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  Because if you do it, you get X, Y, Z.
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  It's also important as an agent in these markets.
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  High price markets, you know, higher interest rate.
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  What's this look like?
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  Because if we're pushing the limit on, you know, the monthly payment and your
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  client is pushing the limit on that, not just what they're approved for, but
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  what they're comfortable with, then we have to make sure that they are aware,
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  Oh, that furnace is avocado green.
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  Like the inspector said that that furnace is well past his life expectancy.
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  The water heater could go, what's going to come up in these next, you
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  know, five to 10 years where this payment is, you know, a little bit,
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  you know, intrusive that we have to do.
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  Your house has to have a furnace, your house have to do this.
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  And so we also want to look at options, right?
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  It may be a little higher monthly payment, but you're not completely blowing your
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  entire savings account is the answer.
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  Maybe you can get into a chaff alone here in Colorado or a down payment assistance
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  loan somewhere else where you have the opportunity to keep that cash in case
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  of emergencies, your rainy day fund.
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  So these are the things that I'm talking to my clients about.
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  And then it makes sense, right?
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  It's like, okay, like, this is why I'm doing it because then just then we get
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  to, you know, the 40 times greater wealth.
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  This isn't a, you know, quick hit day trade, you know, crypto
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  crypto boom thing, right?
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  This is a place you get to live in.
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  You get to make it your own.
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  You get to improve along the way.
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  And if you improve it, you take care of it along the way in our market in
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  Denver, you're going to reap the benefits.
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  But at the same time, we just can't be put ourselves in a position to
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  have to sell when the market's down.
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  And so these are the things that I'm talking to my clients about.
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  And then at the end of the day, They're saying, okay, cool.
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  And then the market is our friend, right?
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  Because if the market goes up, that's great.
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  They're, they're banking on that appreciation.
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  They're getting there.
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  They're building that loan to value up.
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  They're going to get rid of their mortgage insurance when they get to that 80,
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  20, and we're going to be ready to go.
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  But if it's flat, you've prepared them, right?
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  So who cares if you pick up the phone and say, Hey, how you doing?
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  This is kind of what the market value is a little bit less than you bought it for.
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  However, you still have a pretty big loan on that.
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  And if you're just continuing to pay those mortgage payments, we're going to be okay.
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  Is there anything that I can help you with, with the home?
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  Like, you know, are you looking to do some improvements?
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  Are you looking to, you know, make this home work for somewhere?
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  We're looking to turn that office into a bedroom or, you know, things like that.
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  And then I'm helping them manage the asset.
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  If you can be a resource to them, no matter if they've made a hundred
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  million dollars on their appreciation or their flat, or maybe lost a little,
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  just help counsel them, be a resource because eventually the market will turn.
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  Right through the worst downturn and you know the history of real estate homes have
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  appreciated more than double What they were before the crash and so it's about
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  not selling when it's low And if you do have to move you have to have somebody to
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  talk to What are all my options because a lot of people think well, I can't sell
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  it So I just quit paying the payments and foreclosure and all the things right?
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  Let's look to rent it Let's couple it up, right?
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  Maybe you have to rent it for this amount of money because this
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  amount of money is this and you have to have money to live, right?
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  Let's look at the budget.
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  Let's see what we can do.
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  Maybe you parse it out and rent it by room, right?
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  In Denver, I know if you rent homes by room, you get a little bit more overall.
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  It's a little bit more chaotic, a little bit more work, legwork.
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  But at the end of the day, it might be worth it.
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  And so just be that resource and don't be afraid to call people
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  and have conversations because they need you more than ever.
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  They don't need me when I'm calling them and be like, well, it's another
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  year and you gained another a hundred K on your, your house value.
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  That's pretty cool.
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  Right?
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  Oh, you need to refinance.
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  Great.
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  The interest rates are two and a half, right?
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  It's not that anymore.
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  So they need strategic partners and that's exactly what you can do.
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  And that's exactly why you should be the one that's helping people buy in
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  these higher interest rates, higher.
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  Price markets, because certainly higher price markets, I guarantee
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  you in California, they didn't think the first time home buyer
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  was going to be spending 1.
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  2 million on their first home, right?
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  Talk about a difficult market to break into.
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  So let's talk about that.
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  Let's be a resource and let's continue to help people understand and Gain the
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  American dream, which is homeownership.
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  So I hope this helps.
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  I hope I gave you a few nuggets.
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  If you have any questions or you would like to book a game plan, call with me.
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  I'd love to talk to you about your business and help you understand
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  and help prop you up and understand it's all going to be okay.
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  Lots of changes coming, but this one will never change.
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  Show up for your buyers, show up for your sellers, and you
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  will be rewarded handsomely.
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  We'll talk to you soon.