Do You Always Speak Your Clients' Language?
Have you ever read through a doctor's notes after a visit, or listened to your dentist dictate the state of your teeth to an assistant during a checkup? Chances are you didn't know what on earth they were talking about.
If you're not careful about avoiding mortgage-related jargon, your clients may be thinking the same thing. And even if you've been an agent for a long time, it's not impossible to slip up now and then.
Here's an example:
Agent: Good news! The seller is offering you a 2/1 buydown and 3% seller contribution.
Buyer: Huh?
Instead, tell your buyer that the home's seller is offering to sweeten the deal by financing lower mortgage repayments during the first two years of the loan. If you have time to add up the total savings, share that with the buyer too.
One last hint: if you send correspondence with acronyms, be sure to spell them out. For example, if you mention FMV or LTV, follow them with Fair Market Value or Loan To Value.1
Heard About 40-year FHA Loans? Sorry, They Don't Exist.
Recently, the FHA announced that loan modifications to extend distressed loans to a 40-year term would be allowed.
This creates lower monthly payments to help borrowers avoid foreclosure. Unfortunately, the 40-year modification was reported incorrectly on social media, with several self-described financial experts announcing a new FHA 40-year mortgage product via Twitter, YouTube and TikTok.2
Data That Encourages Timid Sellers to Sell
Many would-be sellers are nervous about putting their homes on the market, even if you've explained why spring is the best time to sell. This is because news of higher interest rates may have convinced them that there will be few interested buyers.
Sharing data that illustrates how few homeowners will be selling this year is helpful, as it suggests that they'll be on the winning side: a seller in a seller's market. Since there are more buyers in the market than there are homes for sale, some sellers are receiving multiple offers – which often drives the final selling price above the original asking price.
Sellers who have concerns about not getting top dollar for their updated, appealing properties can relax. Recent sales data has proven that move-in ready homes with curb appeal are the ones that are often selling over the asking price.3
What This Year's Buyers Consider An "Acceptable Rate"
After several years of historically low mortgage rates, today's homebuyers have become sensitive to this year's rates. Many have found a tipping point and a new view of an acceptable mortgage rate.
According to a recent survey, 71% of potential homebuyers will not consider a 30-year loan priced over 5.5%. 62% describe a historically normal mortgage rate to be below 5.5%. According to Freddie Mac, the average rate going back to 1971 is considerably higher at 7.75%. In addition, many buyers are focused less on home prices and more on the monthly payments that result from a particular interest rate. The survey also found that 25% of homebuyers who are holding out for lower rates are waiting until they drop below 5%.4
Builders Cheer Up as New Construction Recovers
While builder sentiment hasn't quite gone into the positive numbers (50 to 100), it recently rose for the fourth month in a row.
The National Association of Home Builders/Wells Fargo Housing Market Index, which measures builder sentiment, climbed to 45 in April.
Builders described low existing home inventory as giving them an "unusually strong edge". Slightly lower mortgage rates are also helping demand. Builder sentiment regarding sales expectations in the next six months increased 3 points to 50.
Regionally, on a three-month moving average, builder sentiment in the Northeast, South and West rose 4 points. In the Midwest, it rose 2 points to 37.5
Sources: 1cresinsurance.com, 2hud.gov, 3keepingcurrentmatters.com, 4cnbc.com, 5cnbc.com
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