A New Challenge and A New Opportunity

Authored By Kim Clifton, Tierra Antigua
Kimberly S. Clifton
Designated Broker
Tierra Antigua Realty
1650 E. RIver Rd. STE 202
Tucson AZ 85718
TierraAntigua.com

Be the reason someone still believes in magic, truth, authenticity, compassion, intelligent conversation, loyalty, courage, and love that doesn’t have an agenda.

We have had a few years of a seller’s market with razor thin inventory and crazy appreciation. Appraisal waivers, no inspections and paying prices much higher than the list price were the norm. Buyers did this just to get a house.

Now we have shifted to a buyer’s market. The Feds are raising their rates to try to slow down inflation. They will be meeting again on November 2nd and again on December 14th. Fixed rates for home loans are hovering around 7%. 

Groceries, gas prices, utilities and just about everything costs more today. People are afraid! They are angry!  As we enter this new market with higher interest rates, people are asking if this is the right time to sell or buy. Clients will demand agents with higher skills who can navigate through this new landscape. We need to be able to give them help with correct pricing. Sellers need you to help them stand out in this environment. Buyers need you to help them decide what price to pay for homes. They need to know that you can help them. 

You need to educate your clients. Many are floating in a sea of not knowing what to do. When a flower doesn’t bloom, you fix the environment in which it grows, not the flower. As this market continues, there will be more homes on the market as it will take longer to get offers. Competition will kick in with increased inventory. Buyers will ask for concessions and lower prices. Sellers will offer incentives to buyers to buy their homes versus other homes. Now is when the marketing skills of the agents will be needed. This is where you will shine! 

Across the country, prices in many areas are coming down as much as 20%. Do your sellers know that? Appreciation over the last two years went up a combined 58%. Normal annual appreciation is 5% to 7% a year. The market could not sustain that kind of growth. Most people would be priced out of the market if it did. Every marketplace is different. Be a student of what is going on in your market. As agents, this will be a daily activity for you if you want to be current.

According to Redfin, roughly 64,000 home-purchase agreements fell through in August 2022 in the United States. That is 15.2% of all homes that went under contract that month.  Do you know how to deal with cancellations? The more educated you are, the more successful you will become and able to help your buyers and sellers.

Home sales are still happening, and having the right real estate professional by your side is critical for consumers looking to take advantage of this new market.

If you expect the world to be fair with you because you are fair, you’re fooling yourself. That’s like expecting a lion not to eat you because you didn’t eat him. 

In every cycle of the housing market, people have purchased property. It will be no different this time. Many renters are stressed out over not being able to find or afford a rental home. If you have alternatives for them, perhaps you can help them buy a home. 

Get together with other agents and have seminars for home buyers telling them how they can still buy houses. Team up with lenders and other agents in your office. Advertise these meetings. Canvas neighborhoods and apartments. You have GOOD NEWS. Be a leader and lead people back into hope and homeownership. 

The demand for quality housing is still high. Some buyers have pumped the brakes on their home search due to recent interest rate hikes. With the increase in inventory, there is great opportunity for those who need to sell and buy. It will create a market where people can negotiate for better prices. If they have to take less when selling, they can perhaps make it up when buying a new home. 

Today will never come again. Be a blessing. Be a friend. Encourage someone. Take time to care and help people understand. Don’t be afraid. Be filled with hope. Let your words heal and not wound people.

Scan the QR code to learn more about Alternative Financing. Talk to people every day. Show them that the world is not coming to an end. This is a natural cycle in the home selling and buying process. Life is GOOD! [QR CODE]

Alternative Financing

1. In Graham, Cochise, Pima and Pinal Counties, there is a Matching Grant Program, called the WISH program, (Workforce Initiative Subsidy for Homeownership) where first-time buyers or those who have not owned a home in the last 3 years may qualify for Grant money while it lasts. For every $1 you put down, the grant will match up to $4 up to $22,000. The buyer must have income at or below 80% of the HUD area median income for the county and will need to take a class. If they keep the home for at least 5 years, the grant will be forgiven. This program might be useful for renters or those who cannot save up a down payment or closing costs. Please check with lenders for other requirements for this program.
2. Call loan officers and find out what new programs and incentive they have. In Pima County, there is a home program that offers 10% of the purchase price in assistance and up to an additional 10% more if they meet certain requirements. There is also a Homebuyer’s Solution program that offers up to 5% assistance. Get ahold of lenders and find out what new programs that they might have. 
3. We have been helping buyers get low interest rate loans for the last couple of years. If you have a seller with an FHA or VA low-rate loan, the loans are assumable with qualifying. Check with the seller’s current loan servicer as to what is needed for the buyers to qualify. If someone has a loan in the 2% to 4% range, that may be very favorable to buyers. If the seller has a VA loan, another veteran can substitute their eligibility for the original sellers. Please check with the lender or the VA for terms and conditions.
4. If the buyer needs cash to put down to assume a loan, perhaps the buyer can get a second loan, or the seller can carry back a second loan if the seller has enough equity.  Again, talk to a lender and the seller.
5. You don’t always have to get a new fixed rate loan. Talk to the buyers about getting an adjustable-rate loan. The interest rate is lower than the fixed rate.  You can have adjustment periods which do not adjust for 5 or 7 years. If the interest rates come down during this period, the buyer can refinance. No one has a crystal ball, so we cannot guarantee what the rates will be in the future.
6. Some lenders have 2-1 buydowns. The seller would pay a fee upfront so that the buyer can have a rate 2% lower than the fixed rate the first year and 1% lower the second year. Years 3 through 30 it will be the higher fixed rate. Check with lender for programs.
7. Instead of reducing the listing price, sellers can offer concessions, money, on the listing, to help buyers pay for lower interest rates or loan costs. The property must be priced well so that it will appraise.