Yes, it is a reality that the real estate market is not the same as it was even a year ago. The landscape has indeed changed. This does not mean, however, that it is a lousy one. Every market holds opportunities for the agent that seeks them out.
Something I am having a hard time getting my head around is the fact that so few agents are marketing to the very group that can best help to unstall the current market. FIRST TIME HOMEBUYERS!
I consistently hear from agents the following predictable lines:
"There just aren't any qualified buyers out there.
"Everybody is sitting on the fence waiting for the market to bottom out."
"The loan programs just don't exist anymore."
The fact is, there really are qualified buyers, they just don't know it and no one is bothering to educate them!
The only way you know when the market has bottomed out is when the prices start to go back up and you've missed it.
Creative loan programs do still exist out there. You just need to develop a strong partnership with a strong lender that is committed to getting the job done, AND WILLING TO THINK OUTSIDE THE BOX A BIT.
There are plenty of young renters out there that simply don't know the powerful opportunities out there for them right now. Think about it. Prices are on the decline, realistic sellers are motivated to negotiate, and mortgage rates are still near historic lows!! There are also an increasing number of opportunities posed by the increase in foreclosures on the market in certain areas.
I recently listened in on a teleconference sponsored by my company given by Darryl Turner, that really crystallized my thoughts on this subject, and has prompted me to write this post. What follows is my rough synapsis of Darryll's conference, with a little data from my own study thrown in.
The first problem is that most folks are turning to the wrong sources for information. CNN (Constant Negative News) is not a definitive authority on the real estate market!!
Most renters don't know how much tax THEY PAY every time they write a rent check. Assuming a typical renter is in a 28% tax bracket, they actually pay out 38% tax on their rent payment. The end result is that a renter paying $1500.00 in rent can actually afford a mortgage payment of $2083.00 per month once the tax advantage is factored in. This means they could technically afford a house in the $290,000.00 price range. Additionall, most renters have not given much thought to how much their rent payments add up to over time. Using the same rent amount of $1500.00, a renter will have paid out $232,923.00 after 10 years, $616,551.00 after 20 years, and a whopping $1,248,388.00 after 30 years. These amounts also figure in taxes paid on rent.
I'll let you all in on a little secret. My wife and myself have been renting for the last six years in the challenging Maui housing market. We have always paid approximately $1500.00 in rent. We have in the last couple years been doing the work of organizing and planning finances, saving reserves and solving inaccuracies in our credit reports. Our income is also very average for our age. We now expect that we will buy our first home within the year, AND finance it at 100%, keeping our reserves liquid. We also plan on buying right here on Maui.
We came to the conclusion that this is possible for us by reading good information, and asking a lot of questions of wise people. Anyone can do the same thing armed with and acting on correct information. Not a single realtor EVER made an attempt to market to us as first time home buyers!!
There are a lot of well qualified buyers out there just like us, and many many that could be if their eyes are just opened to the possibilities before them! If you have not marketed to this largely untapped source of business, you really should! Start gathering farming data for renters in your area, and scour your sphere for folks that are still renting. Your local title marketing rep is always a good source for this type of information. Develop a well thought out marketing strategy to cater to these folks. Good information is key. Start sending these folks valuable information as to their potential to be owners. Walk your farm and get to know these people personally. Some may need information and resources for financial planning and budgeting in order to position themselves. Others may already be well positioned. Be the agent that changes lives! Yes, some of these clients may require some additional attention, but in the long run they will appreciate you, refer to you, and use you again when they are ready to keep moving up the housing ladder. Don't forget, the bottom feeds the top!
From my own experience and through the information Darryl Turner has shared, I am convinced that any agent who thoughtfully and dilligently works the first time buyer market WILL see results. Yes there are always challenges and work to be done, but that sure beats sitting on your hands waiting on "the market" to change, all the while, not making any money.
I'll leave you all with a final thought from Darryl. "No individual can change THE MARKET, but we can all change OUR OWN MARKET!"
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