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We’ve been seeing a lot of you post your favorite pieces of The Blueprint on your Instagram stories, that’s a great way to up your referral game and present yourself as an informed market expert. And speaking of referrals… We’d love to chat with you all on Zoom! Refer 25 of your best real estate friends, connections, and network to The Blueprint and we’ll hop on a call. Ask us anything, shoot the breeze, brainstorm a brilliant marketing strategy, or pitch us your big idea. We’re ready to listen!

Take a look at the referral section at the bottom of this email to check out all our referral rewards, use the share link customized just for you, and leave a reply if you have any questions.

- James and David

The good news about tighter lending standards

While today’s high prices, inflation, and demand may feel like precursors for a real estate market crash, here’s one more reason why another major collapse isn’t likely. The Mortgage Bankers Association’s latest mortgage credit availability report shows that in April, loan standards tightened for the second month in a row. Tightening lending standards mean today’s market is stronger than it was before the 2008 crash. Here’s why:

• Prior to the ‘08 crash, risky buyers with a credit score of less than 620 took out a whopping $376 billion in home loans. In Q1 of 2022, this group only received $20 billion. Fewer risky loans mean fewer foreclosures.

• Today, the median credit score for approved buyers stands at a strong 776, compared to the median score of 707 before the Great Recession. Lenders are increasingly looking for qualified buyers with a history of paying off their debt.

Our take

What a relief. Deep down, we never thought this was even close to ‘08, but seeing this data is proof. Tight loan standards are crucial for a healthy housing economy. If your client is struggling to qualify, it’s important to understand what options they have. We recommend working with loan officers you trust, so you can refer your buyers to them if need be.

Pending contracts continue to decline

A key indicator shows there’s more market cooling to come. Pending home sales dropped again in April, marking six straight months of declining activity. According to NAR’s Chief Economist Lawrence Yun, contract signings haven’t been this slow in nearly a decade.

Pending contracts reveal market trends faster than closings because contracts are quickly impacted by changing mortgage rates. With mortgage rates rising and pending contracts down 9.1% YoY, price growth is expected to slow in the coming months.

Our take

This is something I think we all saw coming. The data matches the trends we’re personally observing. People still want to buy homes, but they’re being more selective because more inventory is becoming available. That’s good news if you’re representing buyers. Your clients won’t find themselves battling 30 other people for one home. Overall, it means that we’re returning to normal. And we’re glad about that. It was unsustainable for the market to remain that hot much longer.

Understanding California’s renter protections

In California, landlords and renters face a patchwork of rental rules and restrictions left over from two years of pandemic protections. These rules prevent landlords from suing or harassing for back rent, taking the property off the rental market, or neglecting property maintenance. Individual protections vary by city and county. Here’s a quick survey of those protections:

• Los Angeles renters facing COVID-related hardships are protected from eviction until at least today, June 2nd. Once the ban is lifted, these renters will have 12 months to pay their rent debt.

• In Pasadena, Maywood, and Beverly Hills, renters will have just six months to pay their back rent. Unless extended, the Pasadena eviction ban will be lifted on June 30th. Beverly Hills lifted its ban earlier this week.

• Elsewhere in California, the eviction ban ended in October, but landlords have to wait until at least July 1st to evict any tenant with a pending rental relief application.

Our take

If people struggle to pay back their rent, that’s one issue. But if renters have to vacate their properties, that is a much larger issue. It will have a huge effect on the market in so many different ways. We suggest keeping a close eye on this situation, because it might tell us what will happen in other states down the line.

Schematics

The news that just missed the cut

• This 32,000 sq. ft. beachside mansion could be Miami’s most expensive deal

• Why Hampton landlords are cutting summer rent by 30% or more

• How these owners sold their property for $171K over asking

• Can’t afford an investment property? Try the “rent to rent” strategy

• Four tips for negotiating a better rental rate

• NBA Cribs: The Golden State Warriors edition

Foundation Plans

Advice from James and David to win the day

One of the best sources of business is repeat clients. They already know and trust you, the relationship is there, and you’ve probably got a strong idea of their wants and needs. But how do you build the kind of loyalty that keeps your clients coming back?

• Be honest. Always. When you put people first, the profit will follow. If you notice red flags, tell your client. If you make a mistake, own up immediately and fix it. We promise you– an honest agent who takes responsibility will have a rolodex of loyal clients!

• Show your appreciation. After closing, show your client you care by giving them a housewarming present, taking them to dinner, or sending a handwritten note. You’d be surprised how many agents overlook this crucial loyalty builder!

• Be supportive, not pushy. People want to be shown, not sold. If you nail this balanced approach, you’ll have the opportunity to help the same clients again and again.

For more tips to build lasting client loyalty, check out this article.

Just in Case

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

So now you know how to build client loyalty… but what about agent loyalty? Remember, professional relationships are absolutely essential to a successful real estate career! Take some time this weekend to catch up with your connections. Grab a coffee, stop by their office, or hit the gym together. Those key relationships will pay off!

Have a fantastic weekend!

- James and David

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