Published by Kartik Subramaniam
Regardless of how you look at it, the real estate market in the United States has been impressive for the last several years - something that looks to continue at least for the near future. A massive shortage of inventory across the country, coupled with mortgage rates that are still at record lows, have created possibly the strongest housing market in a generation or more. Mortgage rates in particular have been on the decline since November of 2018, when they hit 4.94%. Believe it or not, that was the highest those rates had been in five years. Flash forward to January 2021 and rates had dropped to a historic low of 2.65% - contributing to a lot of the activity that we're seeing now.
But it's important to keep in mind that this is a hot sellers' market - something that not every buyer necessarily understands. The pendulum will eventually swing back the other way but it certainly hasn't yet. Because of that, there are a number of common mistakes that they often make that will fall to you as a real estate agent to help them avoid.
By far, one of the biggest mistakes that homebuyers often make in a hot market can be summed up in a single word: hesitation. To say that properties move quickly in a hot sellers' market is something of an understatement. There will be situations where properties sell before they're even officially listed. Bidding wars will break out in a matter of hours. Someone may assume that they can wait for that open house that has been scheduled in a couple of days, but the property may not actually make it that long.
All of this is why hesitation is one of the worst - and unfortunately most common - mistakes that homebuyers often make in this type of situation. Whenever you're working with a new client - especially a first-time homebuyer - you need to make sure they're aware of this reality. Let them know before you even start to show properties that they may have to make fast, firm decisions. Get them ready for the possibility that if they find a home they like, they may have to act on it extraordinarily quickly. Doing so at the beginning of the process will help avoid overwhelming them later on.
Another common mistake that a lot of homebuyers make in a hot market involves failing to look for homes that are actually within their price range. While it's absolutely fair that home values are a bit inflated right now due to the market activity, it's still critical to make sure that someone doesn't stray too far outside of their comfort zone.
Again, during the beginning of your relationship, strongly urge your clients to set a maximum amount that they feel comfortable paying. Verify that this number is realistic in any way that you can. All throughout the process, advise them to stay within their budget when looking for comparable homes. In the event that you see them start to wander and stray too far beyond this budget, remind them WHY they set a limit to begin with.
In large part due to the urgency outlined above, it can be common for homebuyers in a hot market to stumble upon a dream home that is outside their comfort zone, realize that it will be off the market shortly and act without truly thinking the situation through. In a slower market, they'd have the time to come to the realization that no, they cannot afford the property in question. That isn't necessarily always the case when things are moving as quickly as they are, which is why part of your job as an agent is to help keep people grounded and with the perspective they need to make the best decisions possible.
In the end, perhaps the most important thing to understand about all of this is that no two buyers are created in quite the same way. Some people will enter into the situation with a fairly decent understanding of what to do and how to do it when it comes to purchasing real estate. Some believe they are experts in the field and act aggressively - which is where a lot of the mistakes outlined above come from. Others get very confused and overwhelmed and become put off by the whole process altogether.
Regardless of their real estate experience, it's always up to you as the real estate agent to help guide someone to the most satisfying conclusion possible. Especially in a so-called hot market, you'll likely have to spend a lot of time early on educating your clients about the realities of what is happening and, most importantly, why. Neglecting to understand why the market is acting the way it is can often prove incredibly costly to buyers.
Ultimately, you just want what's best for your clients and they want that, too. Helping someone navigate maybe the biggest purchase they'll ever make in their lives will quickly prove that this process is very much worth the effort.Which makes your chosen profession as a real estate agent so rewarding. If you are considering getting started in the industry and would like to take the first step, you can visit and get started on your real estate pre licensing courses! If you are wondering if this profession is right for you, take the quiz: "Should I become a real estate agent?"
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