According to the latest numbers from the National Association of Realtors, existing-home sales decreased for the seventh straight month in August to a seasonally adjusted annual rate of 4.80 million. Sales tailed off 0.4 percent from July and 19.9 percent from the previous year.
High-interest rates, inflated home prices, and inflation have caused some would-be home buyers to put those plans on hold for at least a few months. And, unfortunately for you, that’s not a good thing for your income.
But don’t give up hope quite yet. If this is a slow time for you, you can do plenty of things to stay busy and productive. The key to your success is how you spend your downtime preparing for your more active seasons. Here are some ideas to keep your career moving during a lull in sales.
Your clients waiting until just the right time – or as close to it as possible – should also be using their time wisely. Even if they aren’t actively looking for homes right now, there are things they can do to prep for their next home purchase. And you, as their trusted real estate expert, can help them understand that.
You’ll want to pass this blog along to them. Below, we’ll provide information about a few things they should be doing as they wait to make their next home purchase. These can be completed regardless of how long – a few months or even a few years – they are planning to wait to buy a home.
Improve your credit score
The credit score is a significant factor in your client’s ability to afford a home. Lenders also look at their credit reports to gauge their good track record for repaying debts and assess their overall risk as a borrower. Typically, better payment history and higher credit scores result in lower interest rates.
Credit scores range from 300 to 850. According to data from Fannie Mae, a 740 score or higher qualifies your client for the best mortgage rates. When it comes to credit scores, even 100 points matter. For example, the difference between a score of 740 and 640 could mean a rate up to 2.75 percentage points higher, depending on the loan amount. It’s the difference between a 5 percent rate and as high as a 7.75 percent one.
Ways to improve credit scores include:
- If you don’t have much credit history yet, use a credit card to make small, affordable purchases and then pay them off quickly to build your credit.
- For past borrowers, keep credit card balances well below the limits, and stay current on any other outstanding debt.
- Payment history accounts for about 35 percent of the credit score, so late payments can significantly damage your score. Set bill payments to autopay when possible to avoid missing payments.
- Work on reducing debts and avoid taking on new ones — like opening a new credit card or financing a new car.
Save for a down payment
Often (but not always), buying a home requires a down payment. And in most cases, the more a buyer can put down, the better. Larger down payments will mean lower monthly mortgage payments, better interest rates, fewer fees, and lower closing costs.
While waiting to buy, your clients should consider ways to save money for the down payment. It could mean taking money out of their paycheck each month. If not, there are other ways they could explore.
There are down payment assistance programs available to help, and tapping into retirement funds could be considered. First-time homebuyers can also dip into a traditional IRA without being subject to the additional early distribution tax.
Your clients who have bought homes in the past could consider using funds from a Roth IRA if they have one.
Find a real estate agent
If you’re sharing this blog with your clients, they’ve already gotten smart and found you. So, continue doing everything possible to help them pursue their dream home.
Even though you might not be showing them home listings or helping them navigate the bidding process, you can still be a valuable resource. What can you do? Things like:
- Refer them to a lender to get pre-approved
- Help them determine their home need/want list
- Educate them on the home-buying process
- Provide information about the market they expect to buy a home in
- Help them learn about the community they are considering a move to
This is a biggie. Getting pre-approved may be the best thing your client can do while they wait to start home shopping. It will save them time, hassle, and sometimes, money.
Getting pre-approved means providing their financial details to mortgage lenders and getting a loan offer showing their likely interest rate and the amount they can borrow.
Pre-approval isn’t a guarantee that they will get a loan. But it does mean that they’ll likely get one at the agreed-upon terms as long as their financial situation doesn’t change and the home they buy is worth enough to serve as collateral.
Why is pre-approval necessary? Here are a few reasons:
Your client won’t waste time looking for homes you can’t afford: Mortgage pre-approval sets an upper limit on the amount they can borrow. If they know the borrowing limit, they won’t look at homes they can’t afford.
They will be more likely to get an offer accepted: When they find a home and submit an offer, home sellers may want your client to provide proof of pre-approval. That’s because they’d rather deal with a buyer they know will get approved for a loan.
It will up home closing: Once your client finds the right home, they’ll want to move quickly. Pre-approval streamlines the home-buying process, making it faster and increasing the chances your client’s offer to buy will be accepted.
So just because you aren’t selling homes like crazy right now, it’s no time to feel sorry for yourself. Stay connected to what’s happening in the market and also encourage your clients to do the necessary “off-season” work to make things easier for themselves when they decide they’re ready to enter the market. They’ll thank you for it.
*Not intended as legal or financial advice