How to overcome buyer relucatance in a shifting real estate market
One of the biggest problems we have right now is to overcome buyer reluctance in a shifting market.
I want to give you some key points that will grab your clients' attention, lower resistance and engage them at a high level. Remember every person in front of you shows up with a closed mind (like you right now perhaps). Instead of trying to open their mind, just get their attention with key information and make them more aware. When they are aware and interested, you increase their desire and get them moving into action!
1. Start your conversation by saying " Look, listen" (it will make them stare at you and not their phone)
2. They are delaying buying a home today because they are hoping prices will go lower, so they save money and lower their monthly payments....just like you would.
3. The problem is that when prices drop due to rate increases, they don't save any money on a monthly cash flow basis which is what they are thinking will happen.
Below is some math...just breathe, it is very simple to explain to them :)
Two quick examples to share, while you have their limited attention:
A $400,000 mortgage at 2.7%, 25 yrs = $1836/month. The total interest paid, assuming everything stayed the same, is $149,584.
If the interest rate goes up by 2%, to 4.7% (I know you think it is only a 1/2 or 3/4, but just watch over the next year or so), the monthly payment jumps to $2258, and total interest paid is $277,574.
Now, let's assume your clients wait and the market drops over 25%.............A $325,000 mortgage at 4.7% is $1836 (the same as 400k at 2.7%), but total interest paid is $225,529!!
A $1,000,000 mortgage at 2.7% for 25 yrs = $4579/month. The total interest paid is $373,000
But, at 4.7%, over 25 years = $5646/per month, and the interest paid $693,936!!
Let's say prices drop 20%, so an $800,000 mortgage at 4.7% is $4517/month, and total interest is $555,149!!
So... what you see here is that the payment stayed the same but the interest paid completely offsets any savings gained on price drop!
The point is that it's not about the price, it is about monthly carrying costs and cash flow.
Tell your Buyers to buy now, lock in for 5-10 years and not to worry about the price..................remember, banks qualify on monthly carrying costs and not price
Want to know more?
If you're looking for more information about how to overcome buyer reluctance, and create urgency... or any other ways to build your business, let's schedule a FREE, no obligation 1/2 business consultation.