Get ready for the spring rush. Home buyers may be more eager to get to closing this season before mortgage rates and home prices rise further. That means competition may heat up for the record low number of homes for sale. Are your buyers ready? Instructors for the Accredited Buyer’s Representative (ABR®) designation program—who teach topics ranging from counseling buyers to negotiations and contracts—chime in with their best survival tips on how to prepare for the spring season.
Develop market authority. Make yourself the go-to agent this spring by presenting yourself as your community’s housing expert. As membership in the National Association of REALTORS® spiked to 1.3 million in 2017, you’ll likely face increased competition for buyer clients in your marketplace this season. To stand out, you need a two-part strategy: sharpen your skill set and then showcase your knowledge through content marketing. By pursuing a real estate designation or certification, you’re on your way to establishing a niche expertise, such as buyer representation with the ABR® designation. “It’s great to earn a designation and build your skill set, but you also have to promote it,” says instructor Rob Mehta, president of the brokerage Rob Mehta + Partners, serving the Minnesota and Florida markets. You can promote your expertise through blog posts, social media outreach, homebuyer webinars, or educational videos to highlight content centered on market conditions and resources that speak directly to your niche, like first-time buyer finance guides. Consider hosting homebuyer webinars that debunk 20 percent down payment myths and highlight loan offerings from the FHA, VA, and Freddie Mac or Fannie Mae’s 3 percent down lending programs. “It’s not enough to just have a website these days,” says Rich Hart, a sales coach and instructor. “You need to be repeatedly touching your sphere with content to get them to think of you. Turn yourself into the trusted educator in your market, and give buyers the tools and data so they can make a smart decision and so they want to work with you.”
Set expectations. Offer clients a realistic outlook on today’s marketplace, and explain what it will mean for them. Prepare them if your area is facing limited inventories (translation: you may not get everything on your wish list); high competition (translation: be ready to act fast and possibly face bidding wars for properties); and rising prices (translation: get your finances in order before you shop and understand that mortgage rates are expected to keep rising, which could add to your borrowing costs if you delay buying). “Preparing buyers for the reality of a seller’s market is important,” Mehta says. “Some buyers may have to face the heartache of losing at least one house and having to go through that one loss before heading into the second offer more prepared and pickier about what contingencies they include in order to submit a cleaner offer to the seller.”
Offer a full inventory picture. The number of homes on the market is at a record low, and that’s why it’s more important than ever to make sure you present all options to buyers this spring. The three main types of listings that buyer’s agents should discuss with clients from the start: existing homes, new construction, and for-sale-by-owner homes, says Monica Neubauer, a real estate professional who teaches the New-Home Construction and Buyer Representation course, an ABR® elective. For example, if a customer happens to wander into a new-construction model home without you one day, your ability to collect commission as their buyer’s agent could be in jeopardy, warns Neubauer. Builders may dispute whether you truly represented that buyer. Your best chance of getting paid: Be the one who introduces your client to the builder at the beginning of the process. (Also, make sure you have a buyer representation agreement to protect you and your client too. The ABR® designation provides tips on talking to clients about the need for one.)
Be ready to act fast. Forty-three percent of the existing homes sold in January were on the market for less than a month, according to the NAR. Buyers who have a preapproval letter and who attach limited contingencies to their offer may have the best chances of getting their offers accepted. Preapproval—a step beyond getting “prequalified”—is an analysis from a lender of the buyer’s credit and assets that indicates how much financing the buyer has been approved for. A preapproval letter can be submitted with offers to add some assurance to sellers that there won’t be any hold-ups in financing. Also, a preapproval reminds buyers what they can afford to pay. In bidding wars, buyers can get caught up in the emotional process of the back-and-forth within negotiations, but there’s a lot of risk to that. “We need to share with our buyers that they could overpay and get caught up in the emotional aspects of the process,” Mehta says. “Our fiduciary responsibility is to provide the positives and negatives of a property and to advise clients accordingly in a transaction. We need to be upfront with our valuations and help them make smart decisions, and we watch the contracts carefully so that our buyers are protected.”