Psychology is a key ingredient to success in any business, especially real estate. A positive attitude may sometimes be difficult to have when the media is filled daily with negative reports about the real estate market locally and nationally. For whatever reason, these "Doom's Day" reporters can't find anything positive to say about the state of the real estate business when there are so many positive aspects to report on. We need to ignore the negative headlines. The optimist will prevail regardless of market conditions.
Are there any members of the media who actually have a grasp of the current real estate market? There is at least one. Dan Kadlec's "Right on Your Money" column in the February 25th issue of Time Magazine presented a solid case for investing in stocks and buying a home now rather than waiting for an economic revival. Kadlec uses reason and logic to analyze the buying and selling of real estate. Which is exactly what many of you who attended the Schweppe "Power" classes learned.
In Kadlec's article, titled "Ignore the Headlines!", he advises the reader to tune out all the negative talk and news on recession, housing, subprime woes, the credit crunch, and more. The negative press makes people "sit on their thumbs and wait before making any big moves." But what, he asks, are people waiting for?
Those who stick to a steady, diversified plan while everyone else is retreating will most likely be happy years from now, according to the Time columnist. Kadlec writes that those who are ready to become a homeowner, have good credit, and will stay in the home for five years should act now before an inevitable rise in interest rates wipes out their advantage. He presented the following homebuying scenario:
Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.
We all know the "typical" home in metro Denver is priced higher than this example, but you get the point. Kadlec notes that "Risks always seem most acute when the headlines give you ulcers. But that's exactly when you should think long term and get off your thumbs."
You can use this message when prospecting for new business. Everyone needs to understand that it's a great time to buy a home. People should not let all the media negativity stop them from making an astute decision.
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