May is Commission and Compensation Month here at Inman. We’ll sort through the noise and misinformation and provide you with the most up-to-date facts and strategies about how to prosper in the wake of the commission settlements. And look for straight-to-your inbox updates with Inman’s new weekly digest, Commission Chronicles.
Success begins with an understanding of what is happening and a belief that you can provide clients with the information they need to make the best decision possible for themselves. David Childers, CEO of Keeping Current Matters, is here to share action steps and talking points to recalibrate you to a mindset for success.
Childers began by saying, “Mindset is probably the biggest battle agents are facing right now [with] everything that has come out from the [National Association of Realtors] settlement and the questions about how things will look when the anticipated changes go into effect.
“This leads to the question, who are you listening to? Are you listening to the media, to the people who are fearful, or are you focusing on the facts? Because when you start to look at the facts, they tell a different story than what is often being told. Who you listen to sets the mindset you have and the actions you take, so be careful who you are listening to.”
How to shift your mindset
Childers shared that the first step in creating a mindset for success is to develop a relevant market opinion based on the facts. Childers said, “The questions will come. ‘Are prices going down? What do you think about mortgage rates? What do you think is going to happen over the next six months?’”
You will answer these questions in one of two ways. The first is “I don’t know,” or “We will have to wait and see.” The second is, “Can I share with you a few things I’ve found, and what I believe will happen?” When you have this relevant market opinion based on facts, it is no longer your opinion versus their opinion. It’s their opinion versus the facts.
He suggested agents utilize data to provide prospects with the best information possible. He broke the frequently asked questions into three categories, including pricing, number of transactions and interest rates.
Pricing forecasts are positive
Childers said all agents should be aware of current pricing trends. “Although prices on the local level can vary from national averages, the seven forecasters we follow at Keeping Current Matters have an expectation this year for an average appreciation nationally of about 2.5 percent. But these forecasts range from flat to 5 percent appreciation.
Agents need to understand both the national and local numbers when it comes to pricing. Forming an opinion based on the local pricing trends is critical to success for agents, but when a prospective buyer or seller turns on the TV at night, they are educated at the national level.
So here is what you want to say: “You may have heard this about home prices on the national level, but let me share with you what we are seeing at the local level as well.” At that point, share this slide on the national numbers along with your printed data on the local level.
The ability to show how steady price appreciation can build equity is another way agents can be educators and provide a professional perspective for buyers. This chart shows the estimated home price performance over the next five years from Fannie Mae’s Home Price Expectations Survey.
Although showing these percentages can be helpful, visually showing what those projections could mean in terms of home equity can be even more valuable. This next slide shows the potential growth in equity over the next five years based on the purchase of a $400,000 home in January 2024 and the price appreciation projected by the Home Price Expectations Survey.
An agent’s ability to have a relevant opinion on pricing that is based on facts is exactly what prospective buyers need in today’s environment,” Childers said.
Transaction number projections are encouraging
The next area we discussed was the number of home sales forecast for 2024. Childers said, “The forecasts range from an estimated 4.9 million homes to be sold in 2024 to 5.4 million homes to be sold as the chart shows. This year will be a year filled with transactions; the question is how much of the market share are you going to grab?”
We are in a demand-based rate environment
When asked about mortgage rates and their effect on the number of transactions, Childers said, “The current market is a demand-based rate environment. We believe 6.5 percent is sort of the dividing line between limited to weak demand and good to strong demand.
Most consumers realize it’s extremely unlikely that we would see what we saw two years ago with 3 percent rates on 30-year mortgages, so there are a couple of things we look at to evaluate what the future holds.
We watch what economists are saying regarding the 10-year Treasury note rates and what the Fed is saying about the timing of anticipated cuts to the Fed Funds Rate.
Based on what economists are saying, we anticipate a better rate environment in the second half of the year. Most of the projections show improvement with an expectation of rates being in the 6 percent range by the end of the year, probably in the 6.5 percent range.
Based on sharing this information with prospective buyers, they will often say, “Great, then we will just wait for the rates to come down.” But that is what everyone else is saying as well. This could lead to increased pricing and an increase in the competition to buy the homes that are for sale at that time.
“Based on this, it might be wise for buyers to buy that home now instead of waiting for an anticipated drop in rates and increased competition for a limited number of homes for sale.”
The more things change, the more they stay the same
“In our world, everything has changed, and nothing has changed. Things have changed regarding the NAR settlement and things that impact the way we do our business. But nothing has changed relative to our need to be an educator. Nothing has changed relative to our need to be out in the market with a relevant market opinion based on facts. If anything, the value of being an educator has risen over the past several months and in the last year. So, our job is to be active in our local markets and to share the facts versus what someone’s opinion might be,” Childers said.
“When a question comes up about the market our ability to share exactly what’s happening will be the difference maker. This is a time when people want to know: Do you know what is happening, and can you give them good advice? This takes the pressure off us as well because we don’t have to convince them to do anything. We simply provide them with the best information possible so they can make the best decision possible for themselves and their family.”