Getting “2” work
For those of you who like some good number significance, today we are on Day 2 of Month 2 of Q2. This is a key time for us agents. This is the peak time when deals get done and connections are made with the most interested buyers and sellers.
Remember, what you do now echoes down the line, and there could be a lot of waiting at the end of the line. Home sales are forecast to go up throughout the year, so start making inroads now that pay off later.
We hope you find that as some added motivation to help you throughout your day. Now let’s get to this edition of The Blueprint and then get “2” work!
- James and David
Buyer cancellations drop massively in Q1
The homebuilding market is showing signs of recovery after some brutal times last year when buyer cancellations spiked 32%. There’s some hopeful news coming from reports by Fortune and the research firm John Burns Consulting
Large homebuilders saw massive drops in the number of buyer cancellations during Q1 compared to last year.
PulteHomes: 32% —> 13%
KB Home: 68% —> 36%
DR Horton: 27% —> 18%
Home builders across the board, not just the giant ones, saw buyer cancellations drop to 9% in March, down from their peak of 24.6% in October.
This is extremely good news. It shows that, even in this tough market, buyer demand is strong. In fact, the problem isn’t demand as much as supply. Sellers are on the sidelines. They have such cushy mortgage rates that they don’t want to sell. Luckily, buyers have much greater options now with homebuilders. They can get better mortgage rates if they buy from builders. Many homebuyers don’t know this, so it’s important for us agents to get the word out. We can’t say this enough: get to know the developers in your market and the kind of deals they’re offering.
Buyers adjusting to high mortgage rates?
Homebuyers appear to be adjusting to higher mortgage rates. As CNBC reports, mortgage applications are on the rise, and buyers appear to be accepting these rates as the new normal.
Here are the key takeaways:
Mortgage applications to buy a home rose 5% last week
Total mortgage application volume rose 3.7% week-to-week
Applications to refinance a home loan increased 2% week-to-week
It’s too early to tell whether these early signs represent a stable trend or not, but we want to do everything we can to encourage it. The mortgage rates we saw during the pandemic boom were wildly out of the norm. They aren’t coming back soon. The rates we are seeing now are the rates we had when we experienced the boom of the early 2000s. We need to reset expectations. We suggest going to our first Schematic link. Save, study, and share it!
Milestone number for all-cash sales
All-cash purchases of home and condominium sales just reached their highest level in a decade. That’s according to ATTOM’s first-quarter Home Sales Report released last Thursday.
Here are some revealing trends:
39.3% of home and condominium sales across the United States were done with cash, the highest percentage since the first quarter of 2013
Profit margins for home sellers are above pre-pandemic levels, but below the pandemic boom
Homeowners are only holding onto their homes for 5.59 years, the lowest tenureship since 2011
We aren’t surprised at all by these trends. A lot of buyers have cash on-hand following the financial benefits that came from the government during the pandemic and the amount of homeowner equity many gained over the past two years. Sellers right now are seeing profit margins above what they were getting before the pandemic. Sure, it’s below what they got a year ago, but the pandemic years were abnormal. Use this knowledge to give perspective to your clients, and your potential clients.
The news that just missed the cut
Every agent should keep this on hand
Unemployment rates are below pre-pandemic levels except in these states
Priced out of Florida, seniors are moving here
What were they thinking, even we can’t believe our eyes
Here’s what 2.7 million gets you in California
Advice from James and David to win the day
Sellers are in a weird place right now. A lot of them are staying on the sidelines because they feel locked in by their mortgage rates. Our friends at BAM have written an excellent guide to help you on your follow-up game with potential sellers. There are many great points, but we want to share a few key ones with you:
Be prepared to call a lot. Sales guides suggest making six-plus attempts to reach each seller by phone. Converting leads is going to take more follow-up in 2023 than it did in the prior two years.
Create a favorable environment for yourself. You’re going to be spending a lot of time on the phone, so make your area nice for yourself. And make sure to be there every day for a set period of time. The more you commit, the easier it will be.
Have confidence in selling yourself. We know calling and following up with a potential client at least six times seems so “salesy.” That might put you off, but don’t let it. Sellers may be unsure because they don’t have the knowledge or expertise. They are looking for someone to advise them in the right direction. Remember, you should expect them to be hesitant because selling a home is one of the most important decisions a person can make. But if you show them your knowledge and expertise, you’ll win their trust. It just might take a while!
Read the rest of their guide to learn the mechanics of how to make your calls.
You ask, James & David answer
Q: Would love to hear your opinions on artificial intelligence as a tool in real estate. I’ve been seeing MANY agents utilize it to prospect and correspond with clients, and would be interested to hear your take on that. I feel like AI could be a great tool for some things, but utilizing it to act as a communicator between you and a client seems inappropriate. At the very least, it makes it seem like you don’t care to be personable or build a relationship with your clients.
Michaela, The Blueprint reader, San Diego
A: AI is great, and we definitely think it will have a lasting impact on our industry, but we definitely agree with you. No way should anyone use it to replace the most important aspect of our business–the relationship with our clients. We have members on our team who use it for listing appointments, social media blog posts, and other aspects of content. Our job starts and finishes with how we treat our clients and we’d never let AI risk that.
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Rocket Mortgage
That’s a wrap on today’s Blueprint! Thanks for reading, and we’ll see you Friday.
- James and David