In nearly all social conversations, the subject of real estate is either discussed or can easily be introduced into the conversation. One important way to build your reputation as a Trusted Real Estate Professional/Advisor, is to be able to discuss current events and their impact on the Real Estate Market and Real Estate Prices.
Each week we will be introducing key talking points you can discuss with your buyers, sellers and sphere of influence. We will also offer suggestions on how to use this information. Always keep in mind that you have two ears and only one mouth for a reason. Nobody likes a know-it-all, but everyone appreciates someone that is willing to listen to their point of view. So, don’t make the mistake of trying to impress everyone you meet with how much you know. Instead, ask lots of question.
Finally, it’s important to learn to enjoy learning and discussing your industry. If you struggle with understanding the information at first, don’t worry, it gets easier. Practice makes perfect and will allow you to avoid becoming obsolete as a real estate professional.
P.S. – Family and friends are great people to practice on!
Here are the key topics for this week:
1. European Debt Crisis– Greece will likely leave the Euro Zone and introduce a parallel currency. Why? Under the austerity measures imposed by the European Union, it would take Greece over 20 years of tough times to recover and once again be prosperous. If they leave, they will default on their debt and owe very little. They may not be able to borrow additional funds, but they avoid having to pay back massive amounts of debt they’ve incurred.
With a Sovereign default by Greece, the borrowing costs for Italy and Spain will increase dramatically. This could cause further financial stress to already their struggling economies. Spanish authorities are already in the process of injecting $24 billion into Bankia, Spain’s biggest bank rescue in history. S&P has cut bank ratings in Spain which will further increase borrowing costs.
How this will all affect the U.S. which has substantial trading relations and exports to the Euro Zone? Many experts like Marc Faber of CNBC, see a global recession as soon as late this year. U.S. Treasury Secretary, Tim Geithner stated: “the deeper crisis now facing Europe is a significant risk to the U.S. outlook, as recovery remains vulnerable to events abroad.”
One possible solution to the European debt crisis gaining support in Europe, is for the European Union to introduce Euro-Bonds to pay for loans made to struggling economies. This would bring down borrowing costs for countries like Italy and Spain who are now having to pay 5% and 6% on their bonds. This may not go over well with the German people who would see their bond costs increase to about 4%, from their present level of 2%
2. The U.S. Deficit- is taking its toll on the economy. The Congressional Budget Office projects the U.S. Economy to enter a recession in the first of next year if proposed big tax increases and spending cuts take effect.
What this all means to your Sellers?- Recent improvement in real estate markets and economic news has created an ideal opportunity to list and sell property NOW! Seller’s that wait may risk missing an ideal “Window of Opportunity”, that could close quickly if the U.S. and European Deficits worsen. Why take the chance?