Set yourself up for success
One of the most challenging parts of being a real estate agent is treating yourself like a business from day one. Believe us, we know exactly how hard it is!
We remember making our first paycheck, not putting any money aside, and spending that $100,000 and–boom!–we were in debt $50,000. We didn’t know what an “independent contractor” even meant.
This week on Rise Above the Ranks, we share some of the tough financial lessons we learned as new agents. We also dig into the business management side of being an agent. You don't want to miss the advice and hilarity in this episode!
– James and David
Mortgage rates take big plunge
Source: Unsplash
Mortgage rates plummeted Thursday after the BLS reported that inflation cooled in October. The CPI rose slower than expected last month, prompting both bond yields and mortgage rates to drop. Matthew Graham, CEO of Mortgage News Daily said, "This is the best argument to date that rates are done rising," but also said we won't know for sure until November's CPI.
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The average interest rate on a 30-year fixed-rate mortgage fell from 7.22% to 6.62%, matching the record plunge at the start of the pandemic
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While this drop is significant, rates are still more than double what they were in January
Our take
It’s great news that inflation might be cooling. This will have a direct impact on our day-to-day job. We have a lot of buyers who took advantage of this last week, which is a good reminder for agents to let their clients know when this happens. We don’t know what rates will do next month or the month after, but we do know that people are still buying homes and rates are historically still low. 2-3% wasn’t normal, but this is.
Consumer confidence in housing plunges to all-time low
Source: Unsplash
Consumer confidence in the housing market sank to a record low in October, according to a new report by Fannie Mae. Out of 1000 people surveyed, only 16% thought that now is a good time to buy a home, while 51% believed that this is a good time to sell. High home prices and inflated mortgage rates continue to fuel consumer worries about housing affordability.
Our take
This is one of those headlines that annoys us, just like the “this is 2008 for the housing market.” Obviously, consumer confidence is going to be lower as rates increase alongside inflation. But this is a chance for agents to stand out. Buyers are reading the headlines just like we are, but we have the data to prove that it isn’t a terrible time to buy. As one hesitant buyer waits for clarity, there’s another buyer out there waiting for you to help them find their dream home. It’s also good motivation for your sellers to get realistic with their prices. Instead of seeing this info as a roadblock, we prefer to see it as an opportunity!
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Foreclosure activity surges
Source: Unsplash
ATTOM released its Foreclosure Market Report for October which showed a 57% rise from a year ago, but only a 2% rise from the month before. In total, 32,376 properties had foreclosure filings nationwide. Here are some key takeaways from October’s report:
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Lenders repossessions were up 18% from September and 37% from last year
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Illinois, Delaware, and New Jersey had the highest foreclosure rates
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California, Texas, and Florida had the greatest number of foreclosure starts
Our take
Nobody wants to see data like this, but it’s simply part of our business. As rates increase, mortgage payments become more expensive. When you are working with your buyers, communicate this so they understand the importance of being able to afford a mortgage. Set your clients up for success, even when you have to share not-so-good information like this.
Schematics
The news that just missed the cut
Source: New York Post
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Check out Derek Jeter’s New York Castle
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How this army veteran became a full-time real estate investor
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You can purchase this Stranger Things house for $1.5M
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Check out the nation’s first life-size 3D printed housing development
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The single-family rental market’s dead? Think again
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Goldman Sachs economists weigh in on future inflation
🎧 Rise Above the Ranks
In this week’s Rise Above the Ranks podcast, James and David share how to treat yourself like a business from day one. They talk about the tough lessons they learned as new agents and how you can avoid the same mistakes. Here are some of their tips:
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Create a monthly budget. The most important tip is to create a monthly budget and set aside money for taxes. Your budget should include ALL of your expenses and income. Set aside roughly 50% for taxes, 20% for savings and investments, and 30% to live on. Do not skip setting aside money for taxes because the IRS will come for them eventually!
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Diversify your investments. The economy is changing. This is a great time to buy into the stock market and invest in rental properties. But don't put all of your eggs in one basket. Diversifying your investment portfolio is key to building a financial nest egg.
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Find a good accountant. A lot of new agents avoid using an accountant to cut expenses. Don't do this! Think of your accountant as an investment in your business. You're paying for services that will help make you more money. Plus, accountants can be a great source of client referrals. You might even make more money back in the referrals they give you than you spend on their services!
Q&A
You ask, James and David answer!
Q: Can you please share insights on how to get into an exclusive brokerage? I've been with Keller Williams for the first 8 months of my real estate career, and I’ve sold $1M to date. I'm switching to eXp now because I feel so misaligned with my mentorship at KW. But I really want to be part of a luxury team somewhere like The Agency or Compass. What can new agents do to set up that initial conversation with the sexy brokerages?
A: You have to get creative. Show up to an open house for an agent you want to work for, introduce yourself or bring them a buyer. Send a cold LinkedIn message or email. Add value and show that you have what it takes. We’ve hired plenty of people this way and are sure that others do as well!
Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Rocket Mortgage
That's all for this Tuesday's Blueprint! We're off to for a team retreat in Palm Springs with The Agency. We love the opportunity to meet with other agents in our brokerage, share what we are seeing, and make new friends!
See you on Friday.
– James and David
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