What’s the best way to respond when a prospect asks “How’s the real estate market?”
- Shout “It’s FANTASTIC!” and slap them hard on the back
- Freeze in fear and dry swallow
- Lament that you should have bought Apple stock 20 years ago
- Point at the sky and say “Is that a plane?” and then run away
(I’m secretly hoping you chose none of these)
The reality is almost every person you talk to about real estate is going to ask this question, and most real estate agents don’t know how to answer it. This is your opportunity to razzle dazzle and turn a market conversation into an opportunity. Ready to become relevant?
First, know that EVERYONE has access to market stats. Your real estate association publishes monthly reports, and local media outlets will highlight key numbers for the public. So having statistics does not make you special nor does it elevate you to expert status.
One of the most boring and useless things you can do with stats is recite them back to a client. When you do this, you bring no value because you’re simply spewing numbers that may or may not apply to a particular scenario. Statistics are a database of numbers, and they are meant to be sorted and analyzed to answer a specific question. So just having statistics in your back pocket isn’t enough.
What you need to do is identify how past & current market trends apply directly to a customer’s unique circumstances and their timelines.
But how do we do this responsibly since none of us have crystal balls into the future? Nobody wants to make an incorrect prediction and look like an ass down the road.
- Know the important indicators from your board reports. What is the average days on market for a property and how does that compare to the last 6-12 months. What is the absorption rate? What is the average sale price to list price?
- Inform yourself on what’s happening in the greater economy. What are immigration numbers like? What are interest rate trends? How is the overall balance of supply and demand in housing? Is new home construction keeping up with the demand for housing? What legislation is on the table by the local and federal government that may have an impact on housing supply in the near future?
So how do we put this all together when we’re speaking with a potential client? Lets say you’re working with a young family who are purchasing their first property. You find a home that they’re excited about, but now they’re unsure if it’s the right time to buy.
It could go something like this:
Tom and Kate, none of us can see into the future. All we can do is try to make an informed decision based on good information. If your buying decision is based on timing the market, I would never suggest you or anyone else do that. It’s the easiest way to get burned.
If your buying decision is driven by lifestyle needs, then you should never wait. What I know is that you’re a growing family and you need that extra space, this home is close to the school you want for your kids, and the price is in your budget.
How the market is doing today is really just a snapshot in time. What’s more important is to look at the underlying drivers behind the real estate market to determine how this could play out 5-10 years from now when you decide to sell.
Over time, real estate prices will go up like everything else in this world. In this area, population growth is on the rise and that will continue to put pressure on the current limited supply of housing. The municipality isn’t approving new developments quickly enough, and if things stay the same, inventory can’t meet demand. We also know that interest rates will begin coming down, making money cheaper to borrow again.
If now isn’t a good time for you and your family, when will it be?
Knowing how to answer questions about the market can be one of your most effective super powers an a real estate agent. Always stay informed and be ready to showcase your expertise!