A real estate industry veteran since 1996, Nobu Hata studies real estate sales, marketing, communication trends, consumer trends, social media and technology in the real estate industry, having incorporated new school techniques into several successful real estate sales ventures.
Nationwide, there’s a steady decline in mortgage applications, fewer home tours, and fewer online searches, all signs that some jaded buyers are choosing to sit this late spring/early summer selling season on the benches.
While buyers probably still will face bidding wars, they may not be as intense or as common. In 2021, valuation contingents with traditional credit and all-cash offerings were increasingly required to win a bid. But right now, a buyer could be a bit more flexible with the terms of a purchase agreement, even if the price is still outrageously high.
That’s not to say the demand isn’t still out there – it is and is being driven by two groups in particular: older millennials, aged 32-41, when they’re reaching the point in their careers and personal lives that they’re at looking to make the next move, as well as younger Millennials/Gen Z Cuspers aged 23-31.
For our current environment, this means that buyers with higher rates can eat up their purchasing power compared to last year. But industry experts basically agree not timing the interest rate market and buying when the time is right for you, whatever that may be.
People everywhere are getting creative when it comes to owning real estate. Here are three methods and tips for effective apartment hunting:
BFFs… and homeowners?
See, we’re in this weird environment for the long haul. It’s not going away anytime soon. A lot of people can’t afford their own home, so we see friends and siblings or even business owners coming together to buy a development or vacation property to get a foot in the market.
A 2022 Realtor.com survey of over 1,000 adults in the United States found that nearly one in three Americans has done so bought a main house with someone other than her spouse. And more than half of Americans have or would consider shopping with a friend or family member.
Risky for the friendship or relationship, of course, but there are questions you can address in the beginning to see if it’s a solid idea:
- Who will own the house in the first place?
- What are your credit scores to see what you can both buy?
- Are you both willing to get married when it comes to the house if one wants out of the investment?
- How and who takes care of the ongoing finances such as tax breaks, cost sharing and maintenance?
- Is this relationship safe?
Help clients go into a situation like this with their eyes wide open. While it makes purchasing more viable, dividing money over time is a challenge. Each party should come to a table honestly and be ready to provide financial reports so everyone knows the reality.
Help shoppers examine their emotions to search smarter
Competition and bidding wars aren’t going anywhere, and they’re only fading a little. Help customers think creatively and strategically about where and when to search. If possible, wait until after Labor Day, when markets traditionally cool off, when summer vacation ends and school resumes.
Buyers can also consider waiting until you see more and more inventory becoming available. Again, this move involves some uncertainty as to whether interest rates will continue to rise or fall in tandem with house prices in general.
When buying with a mortgage, buyers should time their financing to lock in interest quickly when they find the home of their dreams. Don’t let them just find any old lender out there. Find someone who can answer the following questions:
- What types of home loans do you offer?
- How do you handle underwriting internally?
- What is your average loan processing time?
- What are my interest rates and my annual percentage rate?
- What is the Credit Estimate?
Having an understanding of proptech (and maybe cryptocurrency as well).
In its most basic definition, proptech uses technology to solve challenges and deliver solutions specifically designed for the real estate industry. Proptech’s goal is to use technology-based tools to make agent and buyer services more efficient and effective. In this market, an agent needs to have a good understanding of how to help buyers understand and use it before, during and after the transaction.
Proptech can encompass a variety of processes and applications, including 3D virtual walkthroughs of homes and neighborhoods, interactive floor plans, augmented reality staging, AI chatbots, checking real home appraisals instead of computer-generated numbers, or using big data along with machine learning of listing images to make informed decisions.
Because so much of your customers’ information—through their use of social media coupled with web and home browsing behavior—is compiled and used in algorithms, they’re as much a target as they are a beneficiary of big data. As an agent, you can help them protect themselves online by helping them decrypt big tech and data.
Blockchain and cryptocurrency in real estate have started to open up avenues for advancing the home buying process. Blockchain technology makes it possible to tokenize assets and trade cryptocurrencies.
While real estate at home and abroad is starting to experience disruption, with blockchain acting as a driving force, the technology in real estate itself is still in its infancy. But as the industry catches up with the blockchain-based concepts of faster, verified, encrypted, and optimized transactions, the cryptocurrency that will power tomorrow’s transactions is emerging today as part of many consumer investment portfolios and as collateral for real-world mortgages.
However, the regulatory landscape in these matters is evolving. Therefore, it is important to have a thorough understanding of these issues in order to guide your customers through a volatile process if they want to use crypto when buying their home or if your seller customers choose to accept it.
Buying a home is difficult, but not impossible. As a knowledgeable professional with a fiduciary duty to your clients, your job is to help buyers weigh and evaluate their options.
Nobu Hata is CEO of the Denver Metro Association of Realtors. Connect with him on Facebook and Instagram.