How to Deal With Rising Interest Rates for Realtors
SUMMARY
Interest rates are on the rise in 2018 and every indication is that they are going to continue to rise gradually. How can real estate agents deal with mortgage interest rates being raised:
- Agents: Use it as a Call-to-Action for your clients. Don’t freak out. This is a normal part of the market cycle.
- Buyers: Don’t snooze…or you will lose. For buyers it means it’s time to move! Higher interest rates lowers buying power.
- Sellers: Jump on it. Buyers are motivated for multiple reasons, so it’s a great time to sell.
FULL TRANSCRIPT
Interest rates are on the rise. Hey YouTube, it’s Kevin Ward your real estate success coach helping you get more yeses and more successes in your business and in your life and interest are on the rise. They are going up. They’ve been going up and then the fed chairman just announced interest rates are gonna keep being raised this year 2018. What do we do about it? What does it mean for the real estate market? And so, let’s talk about it. What it means for agents, what it means for buyers, and what it means for sellers and I’m gonna tell you, the good news is is that it’s good news. It’s good news pretty much all the way around, obviously for those buyers that don’t take action now, good news becomes bad news when interest rates are on the rise. So here’s what you do about rising interest rates.
Number one, for you as a real estate agent, if you’re watching this, I’m assuming you’re a real estate agent, what do you do? You use it. You use it as a c-t-a, as a call to action. For your buyers that have been kind of dragging their feet, piddling, sitting on the fence, “Oh we’re not sure. We’re thinking about it.” You’ve got people that they’re able to buy a house. They’re willing to buy a house, they just kinda haven’t got ready to pull the trigger yet? Well this is the time to tell them to get up and it’s time to move. So for you, rising interest rates give you great leverage. So here’s what I want to say as a counteraction to some of the emotional response that agents have and that is whatever you do with interest rates on the rise, don’t freak out. It’s not the sky … Interest rates rising does not mean the sky is falling, okay? It actually causes people to take action and so you use it as simply an alarm to say, look if you’re thinking about doing something now’s the time to do it. I’m not trying to make you move if you don’t want to move. I’m not trying to make you buy if you don’t want to buy or sell if you don’t want to sell, but if you’re thinking about doing something, interest rates mean something’s gonna happen.
Now, that is important to understand. So, as a real estate agent, do not freak out and go like, “Oh my gosh, now it’s gonna get harder to help buyers, harder to get buyers to buy” and all of that kind of stuff. If interest rates were to keep rising interminably then there comes a point where yes, it kinda, it can hurt the real estate market. The fact that interest rates are going up is actually a good thing in the big picture because look, higher interest rates are normal throughout the history of the world and we have been in historically low interest rates for a historically long time and we have been spoiled. And whenever an economy is healthy, people that have money actually like the fact that there is interest on money. Borrowers, debtors don’t like interest. They like low interest. People that actually have money, like interest rates to be a little higher because it means they make more money on their money. Anyway, bottom line is use it as leverage to get people to take action.
Now, what do you tell your buyers? Well, here’s how buyers need to deal with rising interest rates. Don’t snooze, okay? You snooze. You lose. Right now it is time to take action, okay? If you don’t use the low interest rates that are here right now, you’re gonna lose it and interest rates have already been going up. They’ve already been going up for a while now and based on everything that’s happening and what they feds are saying is interest rates, they’re gonna, they’re looking at raising, they’re predicting, projecting that the interest rates are gonna be raised four times this year. Now the mortgage rates are not a hundred percent tied to that, but when interest rates start going up, mortgage rates are going to go up. So, if you’re, you’ve got that buyer, you let ’em know, it is time to get a move on. It is time to get out there and buy a house cause as your interest rate, as the interest rates goes up, their buying power goes down and it goes down dramatically. When interest rise a quarter of a point, their buying power drops dramatically. When it goes up a half a point, their buying power goes way down and so if you’ve got somebody ready to buy, now is the time.
Now for sellers, what should sellers do? The fact that interest rates are going up? Look with everything else that’s happening in the market, sellers if you want to sell your house, if you’ve been thinking about selling, if you’ve been thinking about, is it time to move or not, it’s time to jump on it. And for you that are watching this as real estate agents, your job is to educate buyers that it’s time to move, don’t snooze. Sellers, look this could be the best opportunity to sell your house. We’ve been in an upward trending market now for years and years and years so long that if you’re a real estate agent, and you’ve been in the business less than ten years, you’ve never really been punched in the mouth as Gary Vaynerchuk says by an economy. You’ve never really had it tough. Well, we are in a great position where the economy is strong. Interest rates start going up, it puts pressure on buyers to take action, so you’ve already got the fact that we’ve had home prices have gone up dramatically. When interest rates start going up, it is the … In a sense, it can be the beginning of the end.
Now it doesn’t mean that … Don’t be a doom and gloom type person that goes like, “Oh. This is about it. If you’re gonna sell, now’s the time or you’re gonna lose.” Cause maybe, maybe not, but it is a great time to move. Because when interest rates are going up, buyers get motivated for multiple reasons. For one, they see prices still going up. Interest rates going up, they know their buying power’s going down so what that means is you’ve got more buyers are there that are more motivated than they’ve been before so if you’re interested in selling, there’s gonna be more buyers that are more motivated, that means upward pressure on the price of your home.
Once the interest rates have gone to those higher points, it can eventually mean downward pressure on pricing because buyers ability to buy more goes down. As interest rates go up, their ability to buy goes down, so it can actually put a downward pressure on pricing, but right now we’re in the front end of the interest rate increases and so it is a great time for sellers. Now since 2007, my crystal ball broke in 2007 when the economy collapsed, so I’m not predicting or projecting what’s gonna happen. I’m telling you this is what is happening. It’s already happening and I’m simply saying, this is how as a real estate agent, you can leverage it. Always watch what’s happening in the market, take advantage of it, leverage it. It’s good for you, it’s good for buyers, and it’s good for sellers. Celebrate interest rates and win. If you’ve got any questions, make sure you post them below. If you’ve got comments, post them below. Give the video a thumbs up. Get out there. Play to win and always expect yes.