Home prices drop at fastest rate in 7 years

Plus, 3 rookie agent mistakes to avoid

Grace Townsley
April 19, 2022

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The rise in reductions

Source: Unsplash

Home sales just set an all-time speed record. In March, 58% of homes that ended up under contract had an offer accepted within just two weeks of hitting the market. But for the other properties that didn’t sell so quickly, price drops are becoming more common. There can be several reasons for this trend. With homes moving off the market at record speed, sellers are realizing that if their home doesn’t get an offer, it’s probably priced too high. Another reason: sellers know it’s a hot market and they don’t want to miss the window.

According to Redfin, here's some data about what’s happening nationwide:

  • 3.2% of listed homes have at least one price reduction
  • 13% of total listed properties in the past four weeks have had a price drop, up from just 10% of listed properties in the previous four weeks
  • The share of listings with price drops is growing at the fastest rate since 2015

Our take

Recently, we’ve been underpricing listings. We believe this leads to more bidding wars, which drives up the sales price and helps our clients wind up with a really strong number. But we don’t just do this alone. We always have a pricing strategy conversation with our seller before we list the property. We feel it’s important to set clear expectations about the list price, and set a strategy for what happens if the property takes time to sell. It’s all about setting realistic expectations with your clients, never overpromising or under-delivering, and making sure you have a clear line of communication with them before you hit the market. 

What’s trending in real estate tech

Source: Unsplash

In today’s digital-first world, brokerages are quickly adopting tech to streamline every step of the sales process. According to Forbes, the industry will be reshaped by these three game-changing tech trends:

  1. Robotic process automations: RPAs allow repetitive tasks – data entry, invoice processing, and document management – to be handled by bots, freeing people to focus on more nuanced tasks. 
  2. Augmented reality and virtual reality: Better property visuals and a robust VR experience will make it easier for sellers to find the right home without even leaving home. This technology can speed up the entire showing and buying process. 
  3. Mobile app capabilities: Apps improve convenience and user experience. In the coming years, apps are expected to help facilitate significant real estate tasks and transactional steps.

Our take

There will always be old school agents who don’t want to change with the times, while the younger generation will be willing to try anything. The old-schoolers will keep working with a certain client demographic, while the newer agents will reach a younger clientele. Each has their place in this industry… for now. Eventually, we’re all going to have to learn at least a few new tricks. Remember: it’s not that hard to adapt. Look at all the old school agents who are on Instagram now!

A new way to (home equity) payday

Source: Unsplash

Nationwide, homeowners now have an estimated $26 trillion in home equity. Tapping into that cash without selling their property used to require a cash-out refinance or home-equity line of credit (HELOCs). But now an increasing number of companies are looking to expand homeowners' options for accessing their equity. 

Splitero, the latest startup in this sector, will pay homeowners cash in exchange for 25% to 40% of their home’s future appreciation price, plus a 2%-4% origination fee. This model offers cheaper cash than a HELOC with little risk to the homeowner. Right now, Splitero only operates in California, but if it’s successful, the company plans to expand as soon as next year.

Our take

This sounds like a good option if you’re looking to take out cash from your house. But keep in mind: taking out debt is always a major decision, and you should always make sure you or your clients understand the risks. HELOCs can be really useful when remodeling your house, or adding another part to it. We will follow this company closely, as any new product in this area is something we want to know about just in case our clients ask us. 

Schematics 

The news that just missed the cut

Source: Omaha World Herald
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  • Would you let a client stay with you? These agents did
  • Here’s what your clients can do if their new landlords raise rent
  • Inexpensive tips for finding off-market listings

Foundation Plans

Advice from James and David to win the day

If you’re a new agent, you’ll want to be on the lookout for any common mistakes that can end up costing you (and your clients) big time. Here are some of those mistakes:

  • Misunderstanding contracts. Offers and contracts are absolutely full of confusing legal jargon. If you don’t understand a condition in the contract, or you’re new to writing offers, always reach out to your team for help! 
  • Misrepresenting your clients or properties. In the heat of negotiations, it’s easy to blurt out half-truths about your buyer’s property or misrepresent their intentions. But if you’re not 100% certain of the answer, just say that! Agents will respect you more for finding the right answer than making up something in the moment. 
  • Undervaluing lead generation. If you’re not putting daily effort into your lead generation activities, you’ll end up with a feast-or-famine career. Be disciplined here. Set aside time every single day to build your leads. Today’s new leads will be next year’s new clients.

Just in Case

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

Source: Rocket Mortgage

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- James and David

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