Fear and risk are opposites. Fear is crippling and risk is managable and can be leveraged to your advantage. Your client will not know the difference, but your expertise can create a risk management policy that can be used as a branding tool or tag.
Please understand that getting a return on your client's housing investment means accepting risk, at least to some extent. But what, exactly, is risk in today's real estate market?
Market risk. - Market risk comes with exposure to a particular asset class or sector, such as housing. It's the threat of the entire market losing value by economic growth patterns of a certain demographic or geographic area.
Economic risk. - Inflation, Deflation, Interest rates. Changes in these risk factors -- or even rumors of changes in these fiscal factors -- can lead to short-term volatility.
Political risk. - There's political risk, or the risk that the current leadership will change for the worse. Then there's the risk that the currency will lose its strength versus other currencies and weakening our purchase power.
In the ideal world, the time horizon and your client's goal would determine how much volatility they can tolerate.
People are not an emotionless robot that doesn't react to volatility, though. They are human. As such, consider how volatility may interfere with your client meeting their goal. Then advise your client to proceed accordingly.
You have a responsibility and an opportunity to introduce every client you deal with to all the alternatives they have available and to help them understand what their housing tolerance is.
Also by helping them recognize these risks you can then offer options that they can take advantage of that could produce a better result and remain a client for a lifetime.
Note: Many of the strategies I have posted intertwine, interface, and when combined with your individual market knowledge can multiply your results several times over.
Maverick Rules!
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