Preparing Your Buyers for Rate Changes
A change in the market is coming. Should your buyers wait to see how deep a mortgage interest rate may be coming or is now the right time to enter the market?
Today I want to talk about interest rates. We have had an interest rate circus for the last few years and people are getting exhausted wondering, "When are the Feds going to lower interest rates?!" I've been talking about this for quite some time, and while nobody knows exactly when federal interest rates are going to come down, I think that we will see that happen very soon. However, today we are looking at the impact of interest rates and market change on your potential and present clients.
A lot of agents tend to, like their clients, plan-and-wait for interest rates to change before they make a decision to do something. This could be a huge mistake. In fact, I think that right now, before interest rates come down, is the perfect opportunity for you and your buyers to have a serious discussion about rates, see where they are financially, and ask the question, "How will it impact you when rates come down?"
Think about this. Let's say you have one buyer right now, who is thinking about buying, but is sitting on the fence. Now consider how many other agents out there have another buyer who is also thinking about buying, but also waiting for a rate change. How many agents are out there with clients like this? It quickly adds up to a lot! There are a lot of buyers out there just sitting on the fence waiting for a change.
Let's imagine that you do nothing with your buyer. Now rates change and they jump off the fence - so do all the other buyers out there. What is going to happen? All those hundreds or thousands of buyers enter the market and start competing. When buyers have to compete against each other, buyers end up paying more.
So, don't wait for interest rates to come down. Instead, be proactive and ready. Talk to your buyers about what could happen. Know what their numbers are, what they need to be able to buy. If interest rates go down X and that improves their buying power, what if they end up spending at least that same X more because they now have to compete on a home with a bunch of other buyers? It may make much more sense to be writing offers now before the competition jumps in. When buyers are waiting on the fence, sellers are more willing to deal.
You want to be negotiating from a position of power, so go look at those homes that have been sitting on the market for a little bit of time. Go have these conversations with your buyers. If buyers are waiting on the fence, those sellers are not getting the success they thought they would be getting and may be willing to negotiate. It's a great moment in the market!
By Denise Lones CSP, CMP, M.I.R.M.
The founding partner of The Lones Group, Denise Lones has over three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development and more, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.