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The housing market is tilting in a new direction, and Cindi Hagley is hearing increasingly loud proclamations from real estate agents about how things could go south.
It’s a confusing tactic from a business standpoint, the Bay Area real estate broker said.
“We also have a lot of doomsdayers in our market, saying, ‘Oh, real estate’s going to crash,’ ‘Why would you buy,’ and, ‘I would hold off on selling,’” Hagley said.
“Why do we do this to ourselves? We don’t need to.”
Hagley, who was speaking as part of a virtual Inman Connect Now panel, discussed how to communicate with clients with two other top real estate professionals: Katie Kossev, of the Kossev Group in Houston, and founding agent Jessica Northrop, of Compass Denver.
All three agreed on a few key points: Clients are entering the homebuying process with some level of concern about the state of the market. For many of these clients, buying remains a good idea. And it’s an agent’s job to coach them through what this moment in real estate means for their search.
“I’m not worried, but that doesn’t mean that our clients aren’t,” Kossev said.
Mortgage rates — now hovering around 6 percent on average — still aren’t particularly high compared to what Kossev has seen over most of her career.
Still, the fact rates have more than doubled in the span of a few months has spooked buyers, especially as prices continued to climb.
Kossev tells clients she thinks rates won’t stay here forever. If rates drop again, homeowners can refinance their loans later and secure a more favorable payment.
In Northrop’s opinion, some of the changes underway in this uncertainty-laden environment are likely to be welcome to buyers.
“It feels a lot like the summer of 2020 when there was a lot of uncertainty in the world, and a lot of questions,” Northrop said. “I can’t fully predict, but it kind of feels that way, that we’re going to see inventory continue to build.”
Northrop is seeing a subset of buyers re-enter the market, who had paused their home searches due to high levels of competition in previous months.
In Colorado, where Northrop works, the dynamics between buyers and sellers are already starting to shift. Homes that were previously sold quickly at premium asking prices are now requiring a bit more finesse from the listing agent.
“We’re not in a premium-plus market anymore,” Northrop said. “We’re in a data-driven, ‘What did the last home sell for,’ and being priced at that, or maybe slightly below, to drive interest.”
As the number of sales continues to decline and home price growth begins to moderate, agents may be tempted to offer lower commissions to attract clients.
For most agents, that’s a mistake, Hagley believes.
Not only does it hurt an agent’s bottom line, but also sends the wrong message to the client about the agent’s confidence in their own skillset, she said.
“If you’re going to try to get me to take a discount commission, I’m not going to take it,” Hagley said. “Because once you find an agent who does that … chances are you’ve found an agent who doesn’t know how to negotiate.”
Instead of undercutting the competition’s prices, Hagley said she and her team are up front with new clients about the fact that they’re not going to be the cheapest option.
They come prepared with examples of good deals they’ve gotten for clients, with an emphasis on what they’ve netted their customers at the end of a transaction.
And if that doesn’t sway the potential client, it’s probably a sign that it’s not a good fit, she said.
“Go in with confidence, know who you are, … pay the other side a fair commission, and have a smooth closing,” Hagley said.
