Here’s a great quote from the philosopher Jim Rohn, “If someone is going down the wrong road, he doesn’t need motivation to speed him up—he needs education to turn him around.”
Here on the Stern Team, we’re very focused on education. And as an agent, you need to be educated enough to act as the local economist for your clients. If you’re not, the overdramatic media will do the job of ‘educating’ your clients for you.
That in mind, ask yourself these questions: Do you know the history of interest rates in your market? Do you know what the current rates are and where they’re projected to head over time? Do you know the history of affordability in your area and where your local market currently stands on that front?
The following resources offer great information to help you serve your area as the local economist:
- The National Association of Realtors
- The Bureau of Economic Analysis
- The Bureau of Labor Statistics
- Freddie Mac
- Fannie Mae
- The Office of Federal Housing Enterprise Oversight
Next, let’s touch on motivation. In a shift, buyers can lose sight of the primary reasons driving their home purchase. More than the neighborhood, school district, proximity to work, or recreational outlets, too many buyers become hyper-focused on price alone. See, our grandparents and the older generations were less focused on price as it pertains to potential equity and more focused on having a place to call home.
Remember this: As agents, we’re looking for buyers who are ready, able, and willing—not buyers who are ready, able, and waiting. Buyers who are able are those who qualify for financing and have money for a down payment/their closing costs. Buyers who are ready have personal reasons for buying a home now, like relocation, school changes, opportunity, or perhaps they’re upsizing. Willing buyers are those who are willing to take action; it’s more about their mentality and their emotions regarding their choice of when to buy a home.
If a buyer is dragging their feet when it comes to making a decision, there are three ways to energize a sense of urgency in them:
Become the local economist
Help them tap into their ‘why’
Help to address their reluctance
Don’t let “should-be” buyers cave into their misgivings that it’s better to wait. Unless they’re a psychic or a gambler, they need to know that it is time to buy—we’re in a buyer’s market, after all.
Ask them, “Do you think that home prices have dropped?” If they answer with a yes, next ask them, “Do you think that they’ll ever go back up again?” If they answer yes again, ask them this third question, “Aren’t you then saying that it’s okay to be out buying again? Given how you feel, if we found you a home that met all your needs and wants today, is there any reason why you wouldn’t want to make an offer to purchase that home?”
We use a lot of data to educate buyers in a buyer’s market. Some of the data scenarios are hard to describe, but here’s an easy enough one to use: the buyer’s trade-up opportunity.
Suppose that a buyer is trying to sell a home at $300,000 but they end up selling it at $280,000. This is a $20,000 loss, but then they go to purchase a home that was listed for $450,000 at first, but ultimately they bought it for $415,000. That’s $15,000 of net savings, and you can use that to help them see the situation from the perspective that they’ve actually gained $15,000.
Markets always favor one sector or another. If it’s a seller’s market, then it’s a good time to be a seller and a risky time to be a buyer. In a buyer’s market, only serious sellers list their homes, so all buyers are in a favorable position. Remember that reluctance is always about unwillingness; it’ll show up as lingering, lagging, delays, or fence-sitting. Reluctance will cause buyers to miss opportunities.
Creating urgency is a learned skill with a foundation around market knowledge, careful consultation, and assertiveness in challenging the buyer’s thinking. Don’t forget: You’re the professional, so direct the dialogue—don’t react.
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