It’s 2011. Not 2010 or 2009. Viva 2011
What’s your real estate market like this week? Is it better than it was a year or two ago?
Back then we had the difficult task of sharing mostly bad news. A rational Fear Of Loss kept buyers who wanted to move from making a move. It was simple logic, buy too soon and home values might fall, resulting in a financial loss.
Last year the Federal Homebuyer Tax Credit artificially stimulated 1st Quarter home sales. The free-money party ended in April of 2010 and real estate sales activity went from gangbusters to bust. It pretty much stayed crappy until January 2011.
From what I can see across the inter-webs and personal experience, the unstimulated 1st Quarter of 2011 is equal to or better than the artificially stimulated 1st Quarter of 2010. Which means that most likely, the balance of 2011 will be way better than 2010. Not a month to soon, amen.
But I’m worried. Real worried.
I’m Worried About Shell Shock
It’s been so crappy for so long, some us may be suffering from Shell Shock. When someone asks if now would be a good time to buy, we start mumbling, our shoulders slump and the light in our eyes dim. We hem and haw. Because we’ve been so beat up for so long, our answer limps from our mouth to their ears. On occasion we allow past emotional scaring to over ride current intellect and logic. This is normal human behavior, but we’re not paid to be normal. We’re paid to perform.
People are counting on us for unbiased and expert real estate opinion and analysis. When they ask the question, “Is now a safe time to make a move?” they expect a thoughtful and intellectual answer. Not an emotional reaction steeped in Shell Shock.
It’s Time To Bury The Past and Rise UP
Note from the editor: The video at the top of this article is of Maya Angelou’s “And Still I Rise,” particularly relevant to the theme of this article.
The Fear Of Loss is perpetually valid. Yesterday, the likely hood of suffering a financial loss by buying in falling market was high. Today’s and tomorrow’s market is 180 degrees different. If our buyer clients want to make a move and they don’t, waiting may cause them financial loss.
It’s a new day and a new market. Let’s think, advise and act like it.
Let’s start by reviewing and sharing a few important factors with our homebuyer clients.
Price & Value and Cost & Expense Factors
Advising our buyer clients to Not-Buy-Now because home values may go down, and they will have lost money by overpaying, is an example making a decision based on the Value & Price factor. Last year in many micro-markets this was smart, simple and logical.
Today, if we’re sincere about helping our clients avoid financial loss, we’ll want to include Cost & Expense factors in our advisory analysis.
Unless our buyer clients are paying cash when they buy, they’re going to use mortgage financing. Their mortgage interest rate determines the Cost & Expense of buying and has a bottom line effect on whether waiting to buy will result in a financial Win or Loss.
Here’s an example of what I’m talking about:

Here’s how we can use both Value & Price and Cost & Expense Factors in our advisory analysis. To figure out if it’s better to wait or make the move, consider alternate future outcomes.
Three What If Scenarios
Keeping in mind that our local and national economies are improving, inflation is real and mortgage interest rates, are rising, We can evaluate the financial risks by asking ourselves which of these three scenarios is most likely:
- Home Prices stabilize and mortgage rates rise. Using the example in the picture above, if mortgage rates rise to 6%, waiting may cost our buyer clients the extra expense of $175.86 more per month. If the value of the properties they’re interested in don’t drop more than 13% in value before mortgage rates inflate from current rates to 6%, the decision to wait would create a financial compound fracture. Waiting would mean they’ve lost on two fronts, Value & Price and Cost & Expense.
- Home Prices drop more than 13% and mortgage rates rise to 6%.
- Home Prices drop and mortgage rates stay the same or fall too.
If you believe that home values in your market will fall faster and further than mortgage rates will rise (2. or 3. above), then advising your buyer clients to stay put is the way to go. Keep your eye on the market and when you see a favorable entry point, advise them to make their move.
If you think prices won’t drop more than 13% before mortgage rates rise to 6%, then your logical left brain will tell you it’s wise to advise your buyer clients,
“Because home values are less likely to fall more than interest rates will rise, now is a safe time to make move you’ve been waiting and wanting to make.“
Do your homework on property-value-trends for your micro markets, consider the implications of rising mortgage rates, Rise Up and advise with confidence.
Here’s what I think about my micro-market. . .
I think home values are stable and some neighborhoods will enjoy a rise in prices/values. Mortgage rates have risen about 1% in the last four months and will continue to creep up.
When my clients who would like to move, ask me if it’s a safe time to move, I would discuss Price & Value and Cost & Expense factors with them. Afterwards, we’d be out the door dream home shopping. Pronto.
What do you think?
What’s happening in your market? What are you advising?
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Cheers and thanks for reading.
Missy Caulk
April 23, 2008 at 4:15 am
Ines, I see it too, I had one agent tell me, “I take every listing, you never know what will stick”. Well, I would never say the word stick but sold. But, it’s just not me, I can’t help but tell the truth. No they don’t want to here it or hire me, but I just can’t do otherwise. Those that trust me and believe me, we form a great relationship.
Same with SEO for blogging. I was obsessed with it for awhile, but it is too time consuming to learn a new industry, so I know I just blog.
Ann Cummings
April 23, 2008 at 4:39 am
Ines – it really is all about the relationships. You build and develop those, and the trust will follow. Then so will all else.
Marc Grossman
April 23, 2008 at 6:29 am
Ines, Totally agree with you. I firmly believe that it is in building relationships and trust. Obviously, so do Missy & Ann. This is the way that we run our business.
Diane Aurit
April 23, 2008 at 6:55 am
Ines, this is beautifully written and spot on, at least as far as I am concerned. The day real estate, blogging or whatever I do is not about relationships is the day I leave them behind. Maybe that’s why all of us that have commented on this post are here today…because we met through blogging and care about and want to support eachother. I’m not at all good at Twittering but I have noticed how much I like waking up and saying good morning to everyone. It is a chance to just connect without any stings attached. That is how I learned about this post and how hard you worked on it. Thank you!
Teresa Boardman
April 23, 2008 at 6:58 am
I have written this post a few times in a few ways. My current theory is that it is easier to worry about seo than it is to write and it is easier to blame seo than to look at improving content if there is no traffic. Everyone looks for a magically solution that doesn’t involve work and some are willing to pay a lot of money for it too.
Ines
April 23, 2008 at 7:18 am
Missy – I guess I’ve been frustrated seeing this from every which angle lately and had to get it off my chest. We need to be true to ourselves first…..the rest does come.
Ann – I know you know, I also know you work hard. Some can achieve a great balance, and I think you are there.
T – we sure can’t write this enough. I’m an academic by heart and tend to overstudy things too much. But finding that “human side” is crucial for success – whether in business, blogging or whatever.
The one that gets me the most is getting bigger corporations to give in a little – they rather loose talent than go again their so called “rules”.
Larry Yatkowsky
April 23, 2008 at 7:26 am
Interesting comments to this point: only women have something to say about relationships. Is this telling us something?
I’m off to check the mirror. Do I need to change? .>)
Mary Pope-Handy
April 23, 2008 at 8:36 am
Hi Ines,
Great points! I have seen what you describe in agents and brokerages over & over and it’s certainly happening in my home town. Managers focus on recruiting, forget their midrange and top producers (leaving them on auto-pilot) and then wonder why the best talent leaves. With each anchor personality who moves out, the offices looses more and more of its sense of cohesion. Playing the numbers game isn’t so smart for a long range strategy.
Also I’ve seen buyers do this (playing the numbers game) with short sale listings. Because so few short sales actually go to closing (I believe the national average is about 20%), they put offers out on 5 or more homes, hoping that one of them will stick. Nevermind that the poor seller is trying hard to avoid foreclosure, and the buyer bailing out 6 weeks into the contract might actually harm someone.
The SEO stuff is important, but it has to be balanced with being valuable to the reader. Anyone who’s ever written a blog only to have Google ignore it (which was happening to me for a long time with one of my main blogs) will understand the frustration that goes with it. Why write if no one can find it? But of course blogging should be about creating those relationships, where at the end of the day, readers feel like they can know, like and trust the blogger. That is what it’s all about.
Christy
April 23, 2008 at 11:16 am
Ines,
Great post and too true. It is all about relationships. No one wants to think they are just a number. People want someone that understands their situation and is genuinely trying to help them.
Ines
April 23, 2008 at 11:44 am
Larry – I was just telling my husband that. Interesting no? go check yourself…..you may find something.
Mary – thanks so much for you well thought out response. I guess the reason I’m not too concerned about SEO is that I had Mary McKnight to back me up from the beginning….talk about putting your blog in cruise-control and let them handle the rest. I remember talking to you about content and placement and let’s talk in 4 months and you’ll see the different with your new RSS Pieces blog.
Bottom line with this is that a lot of us talk about relationships and don’t realize how these apply all around, not just to our clients. If you are a broker out there, what are you doing for your agents? If you blog…..are you providing resourceful tools for your readers? Even if you are a real estate seller…..do you know what type of business your Realtor has? will you be a tally mark in their book? or will they care of you?
btw – your new blog is beautiful!
Ray
April 23, 2008 at 1:51 pm
Excellent Post! Very insightful and from the heart. We too often look for the mega bucks instead of the mega relationships and friendships we can grow from our work. Thanks for being willing to share!
Elaine Reese
April 23, 2008 at 4:24 pm
Excellent points in so many ways – especially the corporate world and personal real estate relationships. In the nearly 10 years I’ve been in this business, I’m still amazed at how some agents speak of their clients (not nice). The teams seem to do this more frequently because they’re too big to get to know each client personally. Their clients are just an address to be processed on the agent’s assembly line toward a closing transaction … or not.
ines
April 23, 2008 at 5:40 pm
Diane – didn’t mean to skip you, your comment must have been held in moderation. I agree with you. And I think you can tell who cares about relationships and outcome always keeping people in mind. Thank you.
Christy – not all people understand. I can tell you that in my market area, a lot of people want to be a number and don’t care about just being part of the inventory.
Ray – it was definitely written from the heart and upsets me when I see people being superficial….maybe I have to toughen up.
Elaine – Rick and I refer to our listings by the client’s name, never by an address – we made a pact to never forget the emotional side. The corporate world will stay unchanged, unfortunately and those few that do see the opportunity, will be the most successful.
Mariana
April 23, 2008 at 8:50 pm
“Rick and I became REALTORS because the industry needed more people like us”
That is the same reason that we got in the business. LIFE is all about the relationships that we make and the relationships that we harvest and the relationships that endure the test of time.
ines
April 23, 2008 at 8:59 pm
Mariana – I know the line sounds a bit conceited…..but I knew YOU would get it. The industry definitely needs more people like you and your paid actor husband, Derek. 🙂
Mariana
April 23, 2008 at 9:11 pm
My paid actor husband, Derek … and your paid actor husband, Rick. 😀
Matthew Rathbun
April 23, 2008 at 10:32 pm
You know, a lot of people scoff at Zig Ziggler, but his saying of “The more people you help get what they want, the more likely you’ll be to get what you want” (paraphrased) is so true in real estate. Referrals are a huge part of business and cost far less than new business.
Respect from your peers also yields results in the other agents eagerness to work with you and help you, if they know and respect you.
ines
April 24, 2008 at 11:27 am
Matthew – absolutely, it’s the basis for repeat business – now how do we get big corporations to change their rigid ways? how do we let the consumer know to look the pretty marketing brochure and know they will be only a number?
monika
April 24, 2008 at 12:26 pm
Ines,
You are so right on with this post. I work for a big national chain and it is number driven. I am into the relationships and sleep well at night. I probably never will be a top producing agent in my firm and truth be told I don’t want to be.
Someday perhaps large brokerage firms will value service as much as production.
ines
April 24, 2008 at 12:54 pm
Monika – I don’t know if they value production either, that’s the whole point. Sometimes their policies are so rigid that not even the top producer can be demands. It’s not a smart way to run a business, especially when new, better and successful real estate models are popping up around them.