Wow, what a week!

Less than 12 months ago, I bought a teardown nearby, and planned to rebuild it into a new home for our growing family. Just this week, I got an offer on the property (which isn’t for sale!) for over 30% more than what we paid for it. It is truly a seller’s market right now!

As much as it’s enticing to sell right now, I’ve learned that real estate is a game of balancing short-term and long-term gains. This is one case where the long-term gain– having a home for my family to settle into– outweighs the quick payout. So, for now at least, we’re staying put and passing on the offer. Sometimes short-term, knee-jerk reactions can save us a penny, but cost more than that in happiness and well-being. 

- David

As expected, the Fed just raised rates

On Wednesday, the Federal Reserve made the announcement we’ve been predicting for months. The Fed raised the federal funds rate by 0.25% (25 basis points). But perhaps more importantly, the Fed also suggested it will raise rates six more times this year to help curb inflation. What does this major news mean for the housing market? In short, mortgages will get more expensive as rates increase throughout the year.  

Mortgage rates have already been reflecting the market’s anticipation of Wednesday’s announcement. That’s why the average rate for a 30-year fixed-rate mortgage already hit 4.25%. Because six more rate hikes are expected this year, mortgage costs will continue their slow climb.

Our take

Six more rate hikes are coming this year, and while that does sound aggressive, remember that the overall rate increase is only expected to be about 1.5%. Even with the increases, mortgage rates will stay near their historic lows. Plus, these rate bumps are good for the economy. Inflation is out of control, and this will help curb it. Rate hikes are just a healthy and necessary consequence of an overheated economy. 

The top three offer-winning strategies

Since the market is extremely competitive right now, buyers are looking for any edge they can get on the competition. According to Redfin, these are the top three offer-sweetening tactics:

• Offer all cash. Cash-only offers (unsurprisingly) are almost four times more likely to be selected.

• Waive the financing contingency. This means buyers can’t back out of the deal if their financing doesn’t come through by a certain date, but it does improve their chances of winning the bidding war by 31%.

• Pre-inspect. Touring homes with an inspector then waiving the post-offer inspection improves buyers’ chances by a not-so-paltry 25%.

Our take 

Our favorite tactic (besides having the most cash to offer) was writing a “love letter” to the listing agent. It’s not done as much anymore, but having a clear line of communication with the listing agent goes a long way in helping your buyer win the bidding war. If you can sell yourself and your client to the listing agent, they can sell you to their client. So speak with them frequently, get to know them, share your buyers’ story, and ask questions. That’s how you make a good impression and set your buyers up for success. 

These 10 cities are surprisingly affordable

Buying a home in this market is challenging, even for those making six-figures. In this report by the National Association of Realtors and Realtor.com, only about 2.78% of all listings last month were “affordable” for those making $100,000 to $125,000 per year. Affordable here means housing costs equal less than 30% of household income. 

But some places are exceptions. Here is a list of the 10 cities that offer the highest number of “affordable” homes for buyers with $100,000 to $125,000 in household income:

1. Deltona, FL

2. Atlanta, GA

3. Des Moines, IA

4. Augusta, GA

5. Lakeland, FL

6. Miami, FL

7. El Paso, TX

8. Bakersfield, CA

9. Columbia, SC

10. Houston, TX

Our take

You’ve got to let your clients know up front that every single city in the country is hugely competitive right now, at every price point. They’ve got to put their best offer forward. Yes, homes are a bit more expensive right now and they might have to pay more than they want. But this is a great mortgage rate that they’ll probably never get again. In the long-term, that mortgage rate savings will add up and pay for itself. And, hey, if you don’t live near one of the cities on this list, reach out to agents in those areas and set up a referral program to help generate new leads.

Schematics 

The news that just missed the cut

• This $105M estate is one of Southampton’s priciest deals

• What $250,000 will get your buyers in 25 major cities

• Buying a vacant lot isn’t as straightforward as it seems

• Share this handy mortgage application no-no’s list with all your buyers

• Showing a tenant-occupied apartment? Tell your client these pros and cons

• The Rock’s old mansion is back on the market for just $125K a month

• Dallas buyers are bribing other buyers to walk away from their contract

Foundation Plans

Advice from James and David to win the day

Earlier this week, we hosted a broker’s open and it got us thinking about advice for maximizing every open house you host. Here are our best tips:

• Tell the whole neighborhood. Hand out leaflets to neighbors. Door-knock the whole street to talk about it. Run targeted ads to that area. Wave down people walking or driving by. Show how excited you are to be there!

• Leverage your listing. Use it as a conversation starter to get other listings. If you’ve sold a home down the street, sellers are much more likely to want to work with you when they’re ready. 

• Make the home shine. First impressions make a huge difference. We’re talking fresh flowers, nice music, refreshments, plenty of high-quality handouts, and, of course, Febreze. 

• Treat every open like your last. Make it your priority for the day. Don’t be on your phone or distracted by something else. 

A really great open is like rocket fuel for your business because it immediately builds your pipeline. No matter the size or price point, put in your absolute best effort because you never know who you’ll meet there or what deals may come from it!

Q&A

You ask, James and David answer!

Just in Case

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

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Have a great weekend!

- James and David