Real estate is all about balance

This weekend, we remembered something a mentor once told us– “always remind your buyers to balance emotion with logic.” 

This rings true now more than ever. The current housing market is causing an unusual amount of anxiety for both buyers and sellers. That’s why it’s more important than ever to use your expertise to help guide your clients through this process.

Buying a home will always be emotional, but it’s our job as agents to help our clients not get too carried away. That’s why we always prepare our clients before we start their home search. We remind them that buying a home is almost always a wise investment, even in a unique market like this one. We also tell them to focus on today’s reality. Don’t think about how prices used to be. Think about the best options available right now.

- James and David

Average list prices break a new record

According to Realtor.com’s March report, the market isn’t quite done breaking records. Nationwide, here’s what’s happening in the industry right now: 

• The average list price hit a new all-time high of $405,000
• Miami, Las Vegas, and Tampa lead the major metros with huge list price gains
• Inventory is still down 18.9% YoY, but that’s a small improvement from February
• Due to rising interest rates and prices, the average monthly mortgage payment is up $375 YoY
• The average home in the top 50 biggest metros sits on the market for only 31 days

Our take 

Since interest rates are increasing and inventory is still incredibly low, we don’t expect a slowdown in the foreseeable future. At some point, the market will have to level off, but for now, move as many listings as you can while the market is on fire, because we don’t know exactly how long this opportunity will last.

These brokerages broke the bank

According to RealTrends, the four brokerages with the highest total sales in 2021 made up a full 20% of US market share last year. Thanks to sky-high prices, these four firms grew their combined revenue by 43% YoY. But they’re not the only big movers and shakers. Check out the top 10 firms with the highest sales volume last year:

1. Compass - $251B
2. Realogy - $246B
3. HomeServices of America, Inc - $199B
4. eXp Realty - $132B
5. Redfin - $52B
6. DouglasElliman - $51B
7. Hanna Holdings - $36B
8. HomeSmart - $25B
9. @properties - $24B
10. William Raveis - $21B

Our take

Looking at these unbelievable transaction numbers might make you want to join one of these mega-brokerages. But at the end of the day, the best brokerage for you is the one that fits your personality and working style. Our advice: interview at multiple brokerages to figure out if you like the management style, the people, and how they help their agents succeed. 

Five cities where people are “flipping out”

Home flips are getting more expensive (thanks to pricey listings, lumber, and labor), but according to Fortune, there’s still a lot of room for profit. In 2021, the average profit on a flip home was $65,000. That’s a whopping 31% profit margin. And profits tend to be even higher for investors flipping with cash or completing less extensive renovations. 

These were the most profitable cities (with their average profit) to flip a home in last year:

• San Jose, CA - $265,500
• San Francisco, CA - $172,000
• Seattle, WA - $149,950
• San Diego, CA - $145,500
• Washington, D.C. - $139,555

Our take

If you’ve got clients looking to flip houses, give them this advice: you make money on the buy, not the sell.

You can do all the best upgrades and get great prices on your materials, but if you don’t get the house for a good price upfront, your profit potential is already shot. It’s such a cliche, but it’s true–the biggest profits come from the sh*ttiest homes on the best blocks. Advise your clients to find contractors they can trust. They have to know their contractor will complete the project on time, at the right price, with good quality work. It really is a partnership that can make or break their sale. 

Schematics 

The news that just missed the cut

• See inside The Weeknd’s luxury homes, including his $70M Bel-Air mansion
• How some properties can re-list at a higher price point
• Every homeowner should keep a digital copy of these property documents
• A midwest couple’s journey to find an affordable California home
• Building a high-performance, high-value real estate team
• One of the best rags-to-riches real estate stories we’ve ever heard

Foundation Plans

Advice from James and David to win the day

So you’ve got a new client looking to buy. Check out these tips for finding them a great property in today’s competitive market:

1. If your buyer is using a mortgage, get a preapproval letter. Like we said on Friday, sellers want to see that your buyer already has the green light from their lender. 
2. Enlist the help of their inner circle. If your buyer can’t see a property right away, have them send a friend or family member as their representative. You have to act FAST in this market, and sometimes it takes a village to find a home!
3. Communicate with the listing agent. In a bidding war, your relationship with the seller’s agent can win your clients the home of their dreams. So communicate well and often. 
4. Encourage them to be decisive. If your buyers like a property, be prepared to move right away. That means explaining the buying process, costs, and expectations before you start looking at properties. 

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

We’ll be answering a Blueprint reader’s burning question right here on Friday. What do you want to know?

We hope you got something useful out of today’s Blueprint. The more you know about the market, industry, and biggest players, the better your personal business will be. So get out there and make this a phenomenal week! 🚀🚀🚀

- James and David