The recent slump in oil prices has cast a long shadow over all sectors of our economy, including real estate in many parts of the country. But don’t give up your license just yet because things aren’t as bad as they seem.
Now, if you listen to the gloomsayers and doomsayers you would figure people were going to stop living in houses until prices go back up. Maybe they’ll go live in tents or stay with relatives until it’s over. That just isn’t the case, but some agents are worried that their business will feel a negative impact. If you’re one of those who is afraid that the current slump in oil prices is going to hurt your bottom line, there’s only one way to get rid of that fear – knowledge. The more you know about something, the less you fear it.
For starters, industry experts believe that the average house price across Canada will increase from $407,500 to $419,318 this year. That’s 2.9 per cent. It’s not a great amount but it is still an increase. What that means, and what you can tell your clients looking to buy, is that if they wait for house prices to drop they may in fact end up paying more.
Experts also say that the oil slump will mean that interest rates won’t rise as they were expected to. Again, this is good news for home buyers – the lower the interest rate the lower their mortgage payment. Plus, in the past falling oil prices have encouraged home ownership because the costs of driving to work and other activities will fall as well. It is the perfect time to buy, but advise clients not to expect huge drops in home prices because the real estate industry historically lags behind oil prices by two years, and in two years who knows where the price of oil will be? Your buyers will appreciate you telling them all this. It shows that you know your business and you’re using that knowledge to take care of them.
For your clients looking to sell, the same things apply. If you spell out the facts it should erase any fear they have of putting their house on today’s market. If they wait they take the risk that their homes will not be worth as much in two years as it is now so now is also the perfect time to sell. As well, the perception that it’s a buyer’s market means that more people will be looking to buy and the more buyers you have the better price you’ll get. You can use the current oil crisis to help convince your clients to list their homes at a price they’re actually worth instead of the price they think they’re worth,
The strength of the public’s reaction to the market depends to a certain degree, as everything does, on geography. If you’re working in a place dependent on oil like Alberta, or Newfoundland where I work, it’s absolutely vital that you know your facts and can calm your clients down. In other areas it’s also important to be educated about the market simply because it’s a good thing and you have that knowledge should you need it. Knowing your stuff will never stop you from getting a listing, but by not knowing it you’re guaranteed to lose some.
Your mission, should you choose to accept it, is to spend 20 minutes a day reading up on how the real estate world is impacted by oil prices. Put it in your day planner and your Google prompts or add it to your to-do list on the fridge. Educate yourself and then use that knowledge to educate your clients. It’s one more value-added thing you bring to the table when you go after a listing. People appreciate it and it just makes you look good. In an industry as competitive as ours you need every advantage you can find to not only keep you in the game, but help you win it.
The next time you’re talking to a client or perspective client, drop a few facts about oil and real estate into the conversation, because even if they don’t mention it they are probably concerned about what it all means. If you broach the subject and use your knowledge to educate them and calm their fears, you’ll go to a whole new level in their eyes. So go ahead, pour some oil on those troubled waters.