In real estate sales and leasing it's very easy to get caught up in what's going on in the moment. You constantly have so many demands placed upon you each and every day to follow-up on what must be done for every prospect and client you are working with. As a result it can be very easy to focus on what's happening now and completely lose sight of the trend and the direction your market is heading in.

When I began my career in full-time real estate sales and leasing in 1980 the prime lending rate hit 21 percent. But ever since that time interest rates have slowly been falling down. And right now they have been consistently right around the lowest interest rates on record over the past 40 years.

We in the real estate business have been extremely fortunate to experience these record low interest rates. The United States has been in a recession and at the exact same time there has been an incredible demand to purchase real estate here. This demand has sent real estate values skyrocketing to record highs in most markets all across America. Homes, investment properties, and business properties have all been increasing in value while at the same time becoming more affordable to so many people because the low interest rates are keeping the monthly loan payments down.

But how long will these low interest rates continue? Nobody knows for sure. So something you may want to do as an agent is take a step outside of your market for a moment and observe what's happening in it. Many agents all across the country are telling me that sales are still continuing at a brisk rate, but it's not quite as crazy as it was 6-9 months ago. Properties are taking a little longer to move now, listings are now receiving fewer multiple offers from different buyers, and it is now becoming less common to see prices being bid up above the original asking prices. There appears to be a subtle transition going on.

Wayne Gretzky, the great hockey player, was once asked during his career why he was such an outstanding player. He responded by saying, "Most players skate to where the puck is. I skate to where the puck is going to be."

As a top agent you want to be a Wayne Gretzky in your profession. You want to be able to anticipate what will happen in advance and you want to advise your clients and prospects accordingly. This is the mark of a true professional. Any agent can take listings and write offers. But the agents who can observe the trends in the market and advise their clients in advance with well thought-out logic and reasoning to backup their own opinions are not in great abundance.

While interest rates are this low both buying and selling make great sense. Sellers can right now get prices that they may not see again for some time once interest rates begin to rise. Buyers can afford to buy properties that they may no longer be able to afford, too. When interest rates begin to creep up again buyers will simply no longer be able to afford to pay the same prices as before. For example, If interest rates were to increase from 6 percent to 8 percent on a particular purchase of a property this would add 33 percent each year to the buyer's annual interest payments. This one factor alone has to have an impact on the price that a buyer will be willing to pay for a property.

We don't know when interest rates will begin to rise again but we do know that it will happen sometime. Once our economy begins to heat up a little and now with our Government commencing once again with deficit spending, these two factors will begin to put upward pressure on interest rates in the coming months and years ahead.

So be the expert. Point out these underlying factors to your clients and prospects and let them know that NOW may be the best time for them to buy and sell real estate. Get them off the fence and get them to take action now! Don't let them be complacent thinking that values and affordability will always get better. So many people start to feel this way when a good market has been around for awhile.

Be the expert and get your people to take action.

Published: December 11, 2002

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