30 years ago, when I entered the real estate business, we used to see a clause, and I used to use this all the time myself, that we would build into offers.

And the clause said something to this effect:

"This offer is subject to the buyer qualifying for a loan and the home qualifying for a loan as noted in the offer terms. And you could say the loan type (conventional, FHA VA, whatever you're gonna do there) at an interest rate not to exceed X."

And that was the key part of that language. And I'm not suggesting you use that language exactly, that's something for you to talk about with your broker. But we would just have an interest rate cap built into our offers.

Now, some people would say, Well Jim, when I have my buyers get qualified, they generally lock themselves in. Not every buyer locks themselves in. A lot of buyers like to try to gamble and float it.

So when we build that language in, it gives the buyer an...

What is the picky inspection?

Now, for years we've been in a seller's market. And the last thing we wanted an inspector to do is to come in and kill the deal, right? But today the market is shifting towards buyers. And buyers are starting to gain more and more leverage in the marketplace.

So when I'm counseling my buyers, I might say, "You know, we wanna get an inspection. That's a fair inspection. But I'm kind of leaning towards advising my inspector to be a little bit more picky than they might have been in the past. Let me tell you why:

Because what we're doing when we do an inspection is really looking at health and safety issues and really big structural issues. You know, the roof is going bad, or there's a bad foundation, or something like that. The minor stuff, the things like just noting the age of a water heater and you know that there's a crack in the sidewalk and you know, the basic stuff, the cosmetic stuff is...

We know interest rates are rising, right? I'm in contract on a couple of different investment properties right now. I'm still out buying despite the market conditions. Actually, it's an opportunity for investors. And when I got to the point of finding out what my interest rate would be on one of these properties at duplex, I was told that it would be 8.5%.

And I about fell over! 8.5%, that's nuts, right?

And she explained to me that, well, you could pay points, get that down to, you know, 7.5%, or even 7.1%. And there was a lot of strategies around that, but it was gonna be expensive on the point side. So when we're having this conversation, buyers like myself are gonna immediately think my, if I'm gonna pay that kind of points, I want somebody to share that cost with me.

Who do you think it's gonna be? It's gonna be the seller. If the sellers are gonna want top dollar, like these Impressment property owners do of course, they might...

I have an important concept for you as we're coming into this challenging market with interest rates.

So I want you to think about something I call parity pricing. Let's paint a picture:

Imagine you're a buyer now. You have a $400,000 budget to buy a house. And you found one and got it in contract. Your budget for your payment is $1,767 a month. That's for principal and interest — we won't worry about taxes and insurance for this kind of demonstration.

So how we came to that number is if we were buying a home in April and we were lucky enough to get a 5.25% interest rate back then, that's what that payment would equal. But fast forward to today, we were shooting this around September where interest rates have shot up to 7.25%. In order for that buyer who only has a budget of $1,767 a month, or for that buyer to buy a house based on today's interest rate, how much would the seller have to come down to get to a parity...

Hey guys, you're gonna be taking a listing in the next couple weeks. And when you take that listing, what if I give you a tool that can help you market it in a way that will set you apart from all the competition and help you sell for top dollar—despite the interest rate issues that we're having in the marketplace right now?

Here's your golden ticket:

When you're sitting with the seller, I need you to ask them this question:

"Can I ask you, what kind of loan do you have on this home?"

If they answer that they have an FHA or a VA loan or a USDA loan, guess what? Those loans are potentially assumable. And if they have a loan interest rate of less than 5%—even less than 6% today—that could be very valuable to a buyer in the marketplace.

Now, there are some conditions and qualifications. Obviously if they're doing a VA loan, the buyer has to be a veteran themselves. But most of these just require that the...

Hey guys, I've got another tool for you:

When you are going out to take a listing and the seller is asking you about getting top dollar for their home, one question you can ask which relates to them getting top dollar is, can I ask you how much do you owe on your current home?

This is gonna reveal how much equity they have and how much they have left to pay off.

Some—about 30% of the people you're talking to—will own their home outright. And the vast majority will have some kind of loan. But a lot of those people have paid down their loans dramatically and they have a very small balance. What if you said something like this to them?

"I got something to ask you guys based on what you just told me:

We're in a high interest rate environment. So it's making affordability a really big issue. And because of that, when people are paying more in interest, they can't afford to pay at a higher price. But if we were able to offer an...

Hey guys, have you ever heard of a blended interest rate?

A blended interest rate is gonna become really important to a lot of us selling real estate in the coming months and years as these high interest rates stick with us.

So here's what a blended interest rate is:

Imagine a buyer has a budget, and they're gonna go out and buy, let's say, a $700,000 house. They have $100,000 down, and now they have $600,000 they're gonna finance. But they can't quite swing the high interest rates that are out there today. It's just gonna put 'em in a place where they can't afford it.

But they're willing to be creative and if you have a seller that's going to be creative, you can still put this deal together.

So here's an example:

Let's say that they were able to go out and get a first mortgage for $400,000 at the current interest rate. Let's call that 7.5%, which is probably where it's headed pretty quick. And the seller was willing to carry a...

What is the rule of five? Well, the rule of five was something that author and speaker John Maxwell came up with.

And what John came up with was this idea that if you have a big task at hand, something you really gotta get done and it can seem overwhelming or just completely out of your reach, how do you make that happen? Despite what might seem like overwhelming odds?

Well, he used the rule of five.

And the rule of five is simply this:

Imagine that that goal is a tree in your backyard. And you have one tool that you can use to cut down that tree: an ax. And so you go outside and every morning you take that ax and you swing it as hard as you can, three times into that tree. And then you put the ax down, you go back inside, and you wait for the next day to come. And the next morning you do it again. And again, and again.

Now, we would all agree that eventually that tree's gonna fall down. No matter how big the tree, it's gonna topple...

Is it a good time to buy a house today?

It's an important question for us as REALTORS to be able to answer and really be passionate about it. This isn't just an answer we're giving because we wanna sell a house, but an answer that's actually backed up by real data.

That way, buyers will actually believe what we're saying and be influenced by what we're saying.

So here are 5 key reasons, backed up by data, why people should be excited about entering the market today:

1. Rents are rising quickly.

So if you're not a homeowner, what are you by default? In most cases, you're a renter. So latest reading shows that rents are up 14.8% compared to a year ago. And they're likely to continue to rise at a fast pace going forward.

2. Interest rates.

Interest rates have settled back down a little bit. They're not at the peaks anymore. So interest rates historically, when you look at the last five decades, have averaged 8%. Right now, we're in the high...

A number that we should be concerned with right now in the market is 16.1%.

So what does 16.1% represent?

It represents the number of transactions that were canceled last month. The last time we saw a number that high was at the beginning of COVID when buyers really didn't know what was gonna happen. March, April, when COVID really went into full effect in our country in 2020. That's when you saw this same level of cancellations. And that's what we're seeing again right now.

So how do we tighten down offers so that sellers have some clarity that they know they're gonna get to closing?

I'm gonna give you several things to think about. You might have a few more. But one of the things is getting the disclosure statement signed as quickly as you can.

Most states require a disclosure statement. This is where we're the seller's gonna disclose everything they know about the house to a buyer. But not waiting around, not delaying getting that...