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The Power is in 'The Terms'.

In all the years I have been in real estate, the seasoned agents may smirk, I have been told the most important thing in home buying is location, location, location. Almost nine years ago when I was sitting in my first real estate class the instructor said it over and over. It is such a common saying you think of it first when someone asks, "What is most important?" (Old car also comes to mind but that is for another post).

It has shifted. Did you feel it? When speaking with two buyers this week they asked me, "What are the interest rates? What do you think I will qualify for?" I cannot tell you how happy this made me. I was a loan officer prior to being a real estate salesperson. This parallels my first set of questions to a prospective buyer. The mindsets have adjusted, the questions are good ones.

The shift we have also seen over the previous year is people are being more realistic about their home ownership needs. Cost of ownership is first, location is second, and amenities are now pulling in third.

In this economy many good people have suffered losing their home to foreclosure and seeing their retirement circle the drain. I myself felt the shift of the stock market when I opened the mail and figured out exactly what I had left/lost. JL Boney said it best when he said, "Just keep thinking long term." Well, not all of us have that option if no longer in the workforce or planning the end of our career. In my opinion real estate is still the best investment.

I cannot say I am happy about what has happened to the real estate market over the past 24 months. However, it is refreshing to see how buyers are changing their priorities. It was a shift I never expected to see in my lifetime.

BTW- Have you hugged your loan officer today? (Insert expletive here). Some may feel they helped get us into this 'adjustment' but I have a feeling they are going to be an asset again.

Posted by Melody Botting Real Estate Network on 11/14/2008 08:42 AM

Comments (66)

Market Shift in the Sales Strategies / Tactics Channel

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Originally posted at: Mel's Diner - Serving Up The Good Stuff: The Power is in 'The Terms'.

Post is included in group: Club Chaos
Post is included in group: Diary of a Realtor
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Post is included in group: "Whacked"!!!

66 Comments on The Power is in 'The Terms'.

NOV

2008

In my area, location is still important because of traffic gridlock in rush hours.

However, the gas prices cause a significant rise in buyers for close to DC areas. Wait! That's still location, isn't it.

Folks are moving closer and closer to their job locations. Even with gas prices down, buyers don't trust them to stay down.

First, thanks for mentioning me. I don't like much of what I have seen lately either, so many people suffering, and so many people unable to make it in the business. But, I too have noticed the shift in what people hold dear when it comes time to purchase a home. I believe it will continue, at least for a while.

Hi Melody

Good Post, I agree, we need to strengthen our relationships with Mortgage Brokers.

Thanks

Rich

I think location will always be important it's just that the bottom line is right on its heels.

I guess it depends on how desperate the buyer is to live in a home. Sometimes a first time home buyer, or in this market even an experienced buyer, wants so badly to own their own home, they overlook a not so great location.

There's a buyer for every home. It's just putting the two together.

Hi Melody-Location is indeed the most important term for all of us. It affects all of us. We make a lot of important decisions based on that very word. There are some beautiful homes available but if the location isn't suitable then it just sits there. This real estate market is the worse I've seen in my 13 yrs as a realtor and they say it could be another 12-18 months before it's starts to turn around. That is pretty scary considering all the sad and heartbreaking things that have already happened because of this market. Have a great day.

Lenn- In my area we are very lucky to have three highways nearby. You can be across the metroplex in no time. I agree no one trusts gas prices will stay down. But price and terms have been the trend I am seeing.

Hi Melody,

No, I haven't hugs our mortgage broker today, I really don't think he would appreciate a hug from me. LOL

Very good post and the times will continue to change for a time to come. Thankfully buyers and sellers are acknowledging the changes.

JL- Getting back to needs instead of wants is the key to staying out of foreclosure and getting a loan you can really afford.

Good Points - Payment has definitely become more important with buyers lately - They want 30 year fixed and they want to know what their payment will be period. In years past with the variety adjustable rate loans, buyers wanted as much money as they could borrow for as little payment as possible. As you know, that's what got us into to this forclosure mess we are in today.

Rich- I worked in that salt mine for years and hated every minute of it.

Richard S.- I agree there is a 'buyer for every home'. You wouldn't believe some of the houses I have sold!

Pat- Thank you for your comment. I see it a little differently. If you cannot afford the home the location doesn't matter. Hence the attitude of, "Show me the money, then I will show you a home."

I think it's a great thing when people become realistic, but I hate the price that so many had to pay before this new found realism came to light.

Hal- You never know. Maybe he really needs a hug! I am sure he has been dodging 'spit' for a while now.

Steve- The onset of fear of an ARM has really set in!

Mel,

When I first started my real estate career in California, I managed many agents and many subdivisions as a marketing vice president to a construction company. I asked a very qualified lender to let me attend their training to be a loan officer so I knew as much about lending as I did about selling. I used this to be able to stay on top of the cash flow of our business to keep the sales closing timely.

When I had to put this knowledge to use (one of the companies I worked for wanted me to do our loans in house) because no local lender at the time had my knowledge and expertise when I moved back to a small town in Georgia. When the lenders got up to speed, I quit doing loans and still have nightmares.

Good loan officers are like good Realtors and good closing attorneys - they are invaluable. Until you walk a mile in their shoes, you just don't know do you?

JL- I agree with you wholeheartedly.

Julie- I was under the impression you started in real estate when you were still in diapers. You are right about the nightmares. I too remember the days of screaming agents and 'fibs' told on loan applications. If you have a good one you need to show them some love!

I agree in concept but lately, in my experience, it has been cost of ownership in the best possible location with amenities coming in last. It is slowing here but hopefully no matter what the parameters we will still see buyers committing!

Russell- That is exactly what I meant.

Featured in "Square Pegs"

Melody, I figured that and hope all is well with you, have a good weekend! We are going to have an Austin Weird event this weekend with a Guinness book of records thing involving a thousand pizza's...I think will will take my camera and write a Localism post about it!

We have spent two days in conferences learning about key words. It is funny that we wait for slow times to educate ourselves.

Shelton

We have spent two days in conferences learning about key words. It is funny that we wait for slow times to educate ourselves.

Shelton

Mel - it is Price, Price, Price, you can throw in location and condition but after everything else, it is price. yes, some people do want to buy in a specific location, but, ultimately, if they can't get it at the price they want, they either don't buy or change the location.

Richard- Grazie!

Russell- I would love to see it! I will be disappointed if you don't post it. That 4 hour drive doesn't seem so long.

Allen- Sometimes we need a kick in the pants to get those creative juices flowing.

Mike- You got me! Price, then terms. Price will not matter if terms don't fit unless you are on an ARM. And that is soon becoming a dirty little abbreviation!

Hey Mel Great post! I am happy that people are becoming realistic again. People are understanding the starter home again which is wonderful. I love my loan officers who have worked with me through these market woes. They are caring individuals who did not go overboard in the past. Have a great weekend

Paddy- "Loving your Loan Officer." Is that an oxymoron phrase? I am hoping it will change. Believe me, there are Loan Officers out there that cringe when they hear my name, I am sure of it! I am glad you have a team of professionals on your side.

It is interesting how buyers interests have changed. Thinking long term and staying focused is so important. Real estate is still the best way to invest in my opinion because it is tangible.

Mel..I am in an area where location has a lot of variables. Farm, hobby farm, stretching room or in town. But for most of these people, it still comes down to location!

Nice to get a common sense buyer. There are still a few of those out there! This week all the upper management at a loan company here were canned. This company would charge like $7500 for closing costs and high rates on risky loans. My question is - why can them, obviously they knew they were writing crap loans, at high rates with high up-front costs. The investors were eating it up. Great profits at the time.... wouldn't you think they may default?? HUH!

We are seeing a trend out here where the buyers are actually looking for a "Home" as opposed to a "Piggy" bank. Location is still a factor but most of the time it is now Price.

Melody- Living in a very small town location isn't a big issue unless......it's oceanfront, but then you have to have the big bucks so those people can afford to still keep their high standards. Overall price is the key here right now.

I agree, people are now starting to consider what they can afford, and then finding a home that fits all their needs, price included - as opposed to finding the house they covet and figuring out how to shuffle the paperwork so they can buy it! ~A:)

Had to stop back in to say congrats on the gold star!

I love my loan officers.....I know what they go through! I originated 2 loans count them as I will not do that again! A good loan officer mean sooo much to getting a transaction closed! And your line about needs vs. wants sums everything up nicely!

Patricia- I agree 100%.

William- For us it is all about terms and price. It hasn't always been. Remember the 'simple interest loan' buzz. Talk about getting thrown out on your hiney!

April- It is very frustrating to me how these people got away with it for so long. It was happening nine years ago and still happens now. Many people are learning to pay the piper the hard way. Hence the high foreclosure rate. (Now I am beating the same dead horse).

Cameron- When I was in California last summer I was surprised the price per square foot was still so high. We don't see that in Texas. Well, not in these 'parts' any way.

Lori- Anything close to water is still booming here as well.

Alisha- I like the realistic change.

JL- Are you sure? I don't see it. That would be nice, however.

Mandi- We crazy Americans should have been doing that the whole time. Freedom can lead to bad decisions. I wouldn't trade it, however!

I could have sworn that I saw it on the dashboard earlier, I'm sorry if it's not because it should be.

That's what I've been seeing to, Melody. Affordability in whatever fashion they visualize that term, then location. They are willing to give up the BEST location for a house that is more affordable. Everybody's doing a reality check, I believe.

JL- Better luck next time.

Heather- Many people have no choice than to do a reality check. I have heard things are going well in Shreveport. One of my favorite places to visit. Just a hop, skip, and a little more than two hours from me.

Very well said, Melodious... ;-)

CTS- Thank you.

Mel, good point about taking a very close look at the cost of ownership. That can filter down in today's economy depending on the projected length of stay in a place, between a buy vs. rent decision.

The good loan officer are awesome! Thank goodness the bad ones are going by the wayside! Good ridden!

Great feature!

I have had the same experience with buyers lately. All of them are buying well below what they qualify for. And that's saying something since they qualify for less now than they did 2 years ago. Maybe that's why they are the people that can still qualify for a loan!!!

NOV

2008

You are correct Mel now that I think about it. Interest rates have been the topic of conversation w/buyers lately.

Hey Mel! So you were a waitress AND a loan officer in your previous life like me? :o) This post is so timely. In the fast and furious days of lending, no one thought about the real cost of their home or if they could afford it. It is so nice to see people getting back to basics. I am finding here that it is cost, then the upgrades then location. It is so strange, with so many foreclosures, we are looking at terrible houses so a house that is upgraded is getting multiple offers! It is sold right away.

I am with ya, Real Estate is still the best investment in my opinion too. If you are in it for the long term, it will pay off!

Gary- I think it is changing for the better. My glass is half full.

Jean- They are certainly challenged these days.

Pam- Smart buyers are the best buyers!

KM- The issue used to be finding a way to manipulate the numbers to make the loan work for the home they wanted. Now they are more realistic than ever before. No more shooting first then asking questins later.

Cristal- I have been blond a few times in my life as well! Just ask my hairdresser.

Mel...

Oh wow, you got re-blogged! Cool.

Mel-In my experience, I hear the question, "Will you help me get financed"? I am not saying location doesn't fit in there, but most times, that comes in later. Once they know they can buy and what they qualify for, then comes location and looking for that perfect home. I guess we are all drilled with the "LOCATION, LOCATION, LOCATION" idea, but I also think we learn fast. LOL Great Blog....

DEC

Melody, I re-read this blog a month after you posted it. The stock Market hasn't improved, but mortgage rates have so the thought "real estate- makes a better investment" is holding true 30 days out. I agree it will be true for the foreseeable future as well.

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