Welcome new subscribers!

For those of you new to The Blueprint Community, we thought we’d break down why we started doing this newsletter in the first place.

• Before The Blueprint, we had to dig through too many different websites to find the news and info we needed to keep up with the market

• We’d get dozens of emails from new agents every week asking for our advice. We wanted to help them all, but couldn’t find the time.

• We always have wanted a go-to resource that we could trust, and with so much differing advice out there, it was hard to know who to rely on

Now we’re learning this whole newsletter thing as we go. So if you think we’re missing important info, or you just plain don’t like what you’re reading, reply to any of these and tell us! We have thick skin. We’re Brits. We can take it.

– James and David

Where did all the mortgage applications go?

Rising mortgage rates will pose a challenge for some buyers, likely leading to less demand. That’s why we’re paying close attention to the latest report from The Mortgage Bankers Association, which just released some surprising numbers:

• Last week, the number of mortgage applications plummeted 13.1%. That’s the lowest weekly total since December 2019. 

• Refinance applications also dropped 15% week-to-week

• Mortgage activity has been lower than normal in six of the first seven weeks of this year

Our take

Our gut says mortgage applications are slowing down because there’s just nothing available for people to buy right now. Low inventory plus higher interest rates are creating a perfect storm. Many people desperate to buy either can’t find a property or can’t afford the rising mortgage costs. Despite this report, it’s still a good time to buy. Rates are still historically low. 

January was a record month for bidding wars 

The competition isn’t just heating up, it’s boiling over. Last month, a record-breaking 70% of offers submitted by Redfin agents faced at least one competing bid. Since many buyers found themselves priced out of the single-family home market, the competition for lower-priced townhomes was through the roof.

Here are the five most competitive cities in January (the percentage references how many offers faced at least one competing offer):

1. Spokane, WA – 83.3%

2. Sacramento, CA – 80.4%

3. Seattle, WA – 79.7%

4. Dallas, TX – 78.1%

5. San Francisco / San Jose, CA – 76.5%

Our take

As home prices keep rising and it’s quickly becoming harder to get a loan, people are flooding the market right now. The market was already incredibly tight, but January was just on another level. We’re expecting bidding wars to be the norm for a while, especially with the Fed’s interest rate hike looming.

Your next big client may not live in your city

The biggest competition for local buyers isn’t coming from anyone in their neck of the woods, it’s coming from out-of-towners. According to Bloomberg, non-resident homebuyers have nearly 30% more money to put on a property than locals. In fact, of the 49 markets surveyed, only seven had residents with bigger budgets than newcomers.

These are the top three markets where non-locals have significantly higher budgets than residents:

• In Nashville, newcomers have an average max budget of $736,000, which is 28.5% higher than the average budgets of locals.

• In Philadelphia, the average incoming homebuyer’s budget is nearly $560,000. That’s 28.4% higher than locals. 

• In New York City, out-of-towners come in with the highest typical budget, over $1.2M. That’s 26.5% higher than the average budget of current residents.

Our take 

These numbers show you should make way for out-of-town buyers. While they may have extra cash, they are going to need more hand-holding and education on the local market. That’s such an important role you play as their agent! Everything’s going to be unfamiliar to them, so you can earn their trust (and calm their nerves) by showing them how you understand the area better than anybody. It may not be their home yet, but you can make them feel at home.

Schematics 

The news that just missed the cut

• This Italian stunner is the priciest listing in the San Francisco area

• Just closed? Tell your buyer to do these 9 things

• An all-access tour of Fisher Island, the richest zip code in the US

• Why KW’s Gary Keller wants you to “buy dirt”

• 6 clever ways to monetize your home (besides AirBnB)

Foundation Plans

Advice from James and David to win the day

Earlier this week we talked about how your relationships with other agents can absolutely make or break your business— and your bidding wars. How do you build and maintain the key relationships you need to succeed?

• Always be ethical. Agents can’t stand unethical agents, and once you lose another agent’s trust, it’s incredibly hard to get it back. 

• Manage your reputation. Think about how you want to known, and then act like it. Your reputation is your most valuable asset in this business. 

• Treat them like friends. Take another agent out for a coffee or meet up for happy hour. Get to know them and have real conversations about something other than work. Understand them and listen. After all, you probably have a lot in common! 

• Support their business. Check out their listings.Drop by their open houses. Talk them up in front of other people. Why? Because support feels really good, and they’ll remember those moments when you’re at the negotiation table.

Q&A

You asked, we answered!

Q: I’m currently studying for the real estate state exam. What advice do you have for a new real estate agent who doesn’t yet have a mentor?

– Nikki D., Los Angeles

A: Get a mentor as soon as you can. Find another agent whose style you like. If you can’t find a mentor, study your local market in and out. Go find areas you like, go learn about the recent homes that sold. Study Redfin & Zillow and use all the free resources you can. And, of course, keep reading The Blueprint! We’re here for you.

What are you wrestling with in your RE career? Please, let us help! Drop your questions here.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Thanks for reading today’s Blueprint! We’ll be back here on Tuesday rounding up the top stories and tips of the week. Enjoy your weekend!

– James and David