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Reeling in Hesitant Buyers
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| August/September 2007 |
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| Reeling in Hesitant Buyers |
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Potential buyers now may be more fickle than ever. Are you prepared to address their concerns with solid reasoning that will motivate them to jump confidently into the market?
Buyers today may not be as eager as certain favorable market statistics might suggest. Even though average interest rates fell to 6.2 percent earlier this year, and the economy added 3.5 million new jobs,1 the National Association of Realtors® (NAR) projects new-home sales for this year to be well below last year's numbers.2
The Consumer Confidence Index showed higher confidence levels in May 2007, but dipped in June, due in part to consumer perception that business and employment conditions are unsteady.3 Assurance from home builders that steady prices and ample selection make this a great time to buy is key in getting the wallflowers out on the dance floor.
Here are some suggestions for addressing hesitance and helping prospects to graduate from browser to buyer.
Concern: Home values are down, so shouldn't I wait to sell my existing home at a higher price before I move up to a new home?
Reassurance: Sitting tight may cost your buyers. If they wait for their home value to go up, their "trade-up" home will also likely increase by a parallel percentage. Inform them that according to NAR, lower prices draw buyers - for every 1 percent drop in home prices, an additional 50,000 buyers enter the market!4 - and encourage them to compare and evaluate home prices and affordability at present.
Concern: Lending restrictions are too tight right now.
Reassurance: A bad financial or home-buying experience may have your buyers hesitating. Listen to their needs and assure them that it is possible to find mortgage terms they are comfortable with. Let them know that many experts expect mortgage rates to remain low throughout the end of the year,5 and make sure they understand that a low monthly payment is only one factor to consider in comparing loan programs.
Concern: It's a buyer's market. I can hold out until my terms are met.
Reassurance:
Buyers have bargaining power, but for how long? Uncertainty can be a good motivator to encourage action before the market changes. New- and existing-home sales are both down from last year,2 and competition among sellers is tough. Remind potential buyers that what goes up inevitably comes down, and, ideally, you want to buy while you've got the upper hand.
Here are a few more ways you can handle hesitancy:
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Think small. You don't have to change the world; you only have to encourage one potential buyer at a time. Position your homes as absolute bargains in a buyer's marketplace by demonstrating outstanding value.
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Shoot straight. Educate potential buyers and make sure they have realistic expectations. They typically want detailed information about your homes, but positive and on-target discussion about market conditions can also instill confidence. Bookmark mortgagenewsdaily.com* for regular market news and alerts.
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Add value. Combine price and non-price incentives. The competitive homes of today can offer so many advantages over older homes. Integrate and promote technology, energy efficiency, warranties, customization and other amenities.
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Become an ally. Empathize with buyers by doing research above and beyond the numbers. Find out what they want firsthand, understand their needs and deliver!
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| 1 |
"The Wrong Connection," Lawrence Young, Realtor® Magazine, July 2007. |
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"Tighter Lending Standards Good for Housing, But Will Dampen Sales," The National Association of Realtors® press release, April 11, 2007. |
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"The Conference Board Consumer Confidence Index Retreats," The Conference Board press release, June 26, 2007. |
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Real Estate Insights, National Association of Realtors,® (NAR), January 2007. |
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"Stable rates May turn the market around," Tamara E. Holmes, CNNMoney.com*, Real Estate Guide 2007 |
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