What buyers are giving up to land a home

Plus, the tax advice we learned the hard way

Grace Townsley
March 25, 2022

Is 40 the new 30?

David here. Thank you for all the birthday wishes. Some people look forward to turning 30 and finally putting their wild twenties behind them. But I’ve always looked forward to turning 40. I feel like it’s a significant milestone. At 40, you finally know who you are, where you’re going, and what you’re doing. It’s so much more comfortable, right? 

Plus, at this point in my career, I finally have the experience and track record I need to work with the kind of clients I only dreamed of a decade ago. This is what we’ve been building up to since we first started. 

I’d say I learned a big lesson this past year. It’s one that I think we all know intuitively, but often forget. Real estate isn’t a sprint. It’s a long, slow, sometimes exhausting marathon. But it’s always worth it. I can’t wait to see what the next decade holds for us! 

- David

What buyers will give up to get a home

Source: CNBC

Realtor.com released a detailed report describing exactly who’s buying and selling right now. Their 129-question surveyed nearly 6,000 recent buyers and sellers. There were many interesting stats, but these are the ones we wanted to share with you:

  • Nearly 75% of buyers compromised on what they wanted in a home
  • 27% of buyers compromised on price
  • 21% of buyers compromised on a home’s condition
  • The remaining buyers compromised on size of residences and yards, and distance from family, friends, and jobs

Our take

This shows that a lot of buyers are willing to give up some of their wish list items just to get into a home. We’re seeing this in our day-to-day as well. There’s a massive influx of new buyers with this kind of down-to-Earth mentality. Most of those buyers are millennials. Be sure to target potential clients in that demographic, because they are eager to land their first home and might be willing to compromise even more.

Mortgage applications are on the decline

Source: Unsplash

Applications for new mortgages dropped 2% last week and are down a full 12% YoY. Refinance applications also dropped 14% week-to-week. What’s behind this slowdown? The average rate for a 30-year fixed-rate mortgage hit 4.5% and home inventory is still extremely low. That means it just got more expensive to buy the few homes left on the market. 

Whether your clients are looking to buy or rent, costs are likely to continue rising. With six more rate hikes expected this year alone, mortgage rates could hit 5% or more by the end of the year.

Our take

These stats make it look like the market is slowing down, but that’s absolutely not the case. To us, fewer mortgage applications simply means fewer people are finding homes because of low inventory. We aren’t seeing the market slow down at all, so don’t let these numbers stress you out!

iBuying is working for Opendoor

Source: Opendoor

Opendoor is poised for an incredible 2022. After purchasing and renovating thousands of homes last year through iBuying, Opendoor is now listing them at an average of $60,000 over purchase price. That’s the highest margin in Opendoor’s history. 

These numbers show Opendoor achieved what Zillow couldn’t. Zillow struggled with its purchase-price algorithm, causing the company to overpay for these homes and then sell them at a loss. But Opendoor’s slow-and-steady approach is fully capitalizing on today’s home price appreciation.

Schematics 

The news that just missed the cut

Source: NY Post
  • This farm went on the market for the first time in 300 years
  • These seven tips will smooth your client’s home buying process
  • Handy tax tips for home equity loans and HELOCs
  • How one investor grew his property portfolio to $2.5M in four years
  • The most common real estate scams and how to avoid them

Foundation Plans

Advice from James and David to win the day

As a new agent, filing your taxes for the first time can be daunting. We remember our first tax year after we started our real estate business. It’s overwhelming! But these tips can help you prepare for April 18th and keep more of what you earn:

  • Save at least 30% of your income. Most agents are considered “self-employed” and have to pay a self-employment tax, federal tax, and state tax. In most cases, no one is withholding this income for you, so it’s up to you to save it until it’s time for quarterly filing. And yes, you should be filing quarterly to avoid penalties and interest!
  • Get a retirement account. Unless your agency offers a 401(k), it’s up to you to save for your retirement. Open an IRA account. You’ll be setting yourself up for your golden years and reducing your taxable income. 
  • Don’t forget deductions! You can deduct things like your vehicle use and gas, business insurance, client gifts, advertising costs, and health insurance premiums (and check out this video for even more ideas). Always keep your receipts for this stuff!

There’s no question that paying taxes is never fun. But we think of it like this–the more taxes you have to pay, the more you earned this year! We have been paying off quarterly taxes for as long as we can remember. It’s easier for us, and it stings less. In a way, it’s actually a good thing to set aside more for your quarterly taxes. It means you’re doing something right!

Disclaimer: We’re real estate pros, not CPAs. Definitely consult with a tax expert if you have questions about your unique situation.

Q&A

You ask, James and David answer!

Q: What do you do when an agent says they’ll send their buyer to see your listing, but they can’t be there themselves? When that happens, I feel like I have to work on that agent’s behalf, but for no pay if their client doesn’t put in an offer.

Steven, The Blueprint reader (California)

A: Our feeling is… do it anyway! Yeah, we get it, it's annoying to go out there and do someone else’s work, but to be honest, WHO CARES?! Money is money, so close the deal and move on. Who knows what will come from that meeting? You just might click with the potential buyer and find yourself signing a new client ;) 

James and David

Got a question for us? Have some feedback to share? Get in touch with us here

Just in Case

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

Source: Rocket Mortgage

If you're new to The Blueprint, thanks for joining. We hope you learned something and found this newsletter useful. If you did, share it with your team! Our goal is to help as many agents as possible keep getting better and better at their jobs. And you’ll get some pretty sweet referral rewards in the process. 

Have a great weekend.

- James and David

P.S. This meme made us laugh this week. Too true, right??

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