Dec 20, 2022 7 min to read
Until late Summer 2022, the market was on fire.
The aftermath of the pandemic, coupled with high wages and more mobile workforces made for a perfect storm of high demand and low supply.
But now, rising interest rates and an uncertain economic future have caused the market to slow down.
When we first started seeing headlines about housing affordability, it understandably caused a lot of panic and knee-jerk reactions. It’s important to remember, though, that just because you’re not seeing multiple competing offers, above asking price, for each of your new instructions, that doesn’t mean you need to change EVERYTHING. Generally speaking, the best agents instruct, negotiate and sell in much the same way, regardless of whether the market is hot or cold – and there are some great tactics that can help you close more deals in a cooling housing market.
Here’s our 2p on them:
- Don’t get in the way of a deal. In a rising market, price often takes care of itself. It becomes the focal point for most negotiations. When a market starts to cool, it’s often where the agent tends to focus on, when client motivations plan a much bigger role in their decision making process. Price is only one part of the complex process of a real estate transaction. In a cooling housing market, compromise is key. Sellers (and buyers) will need to be more collaborative and willing to make concessions on items other than price. Which items? That’s your job as an agent to find out. Stay curious in every conversation. The longer you spend understanding every single party’s true motivations, the better positioned you will be to negotiate a win for everyone.
- Understand that buyers and sellers are scared in this market. Owning a home is one of the biggest investments most people make in their lives. Just six months ago, money was cheap, sellers were in paradise and buyers felt they had to rush. Now, times have changed. They’re watching the same nightly news as you and are worried about ‘market chaos’ and other sensationalist headlines. Agents who ignore that fear do so at their peril. Luckily, as an agent, you can understand the local reality and deliver context to almost every headline/news report. Acknowledge to all your clients, be they buyers, sellers or landlords, that you know that the market may have them frightened, and that they are probably uncertain about its future. This will lower their defence mechanisms – which allows them to actually hear your advice.
- Learn how to handle the ‘take-it-or-leave-it’ attitude. The next time your buyer or seller tells you this is the “best and final” offer or “this is as low as we will accept” and you can “take it or leave it,” don’t panic. Any threat or demand from the other side is almost always their hail mary to get what they originally wanted, instead of accepting what they need to do to move forward. When you encounter these attitudes, ask great questions to clarify as much of their circumstances as you can and to learn what’s really holding them back. If you find yourself at an impasse, don’t be afraid to calmly walk away. Let them know it looks like there’s nothing you can do. Thank them for being a pleasure to work with, and let them know you’d love to work with them again in the future.
You’ll either evoke a response of “wait” and then continue negotiations, or you will end on more than agreeable terms. Both scenarios are positive in the long term for you and your reputation!