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Scare Tactics or Education?

By Lynn Krogseng

Real Estate Agent with Keller Williams Premier Partners

October 19, 2009 10:51 AM

Scare Tactics or Education? I was talking to a lender about a mutual client. I asked her if she would send a letter to our mutual clients with a comparison of what their payments and purchasing power would be if interest rates went up a half point or a point. She said "I don't work like that". It felt like I had asked her to do something slimy, and I wondered what was wrong with that kind of information.

I'm not stuck on the subject, but I am giving it some thought. To me, it's educating my clients on the the risks of trying to time the market or time the economy. I work the same with my sellers - letting them know that in my opinion, if they wait to sell, in this current market, they risk being in competition with more short sales and foreclosures and what happens to buyers when interest rates rise.

Scare tactic? Well, I suppose. Same as the doctor telling me I risk getting cancer if I smoke tobacco. As for rates changing and my clients waiting to buy later, well, that's their decision. I'm not trying to scare them into buying, but I do want to at least educate them on what their risks are. Is that so bad?

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Lew Corcoran

Better Living Real Estate, LLC - East Bridgewater, MA

Real Estate Agent, Home Stager, & Photographer

Lynn - What you proposed is education, not a scare tactic. You should educate your clients on the possible outcome if he or she waits as opposed to taking action now. For example, if you wait, what would happen if home prices fall say 5% and mortgage interest rates increased from 5% to 6%? How does that affect you as the seller and how does that affect potential buyers? (Buying power reduced, buyers may find a lessor priced home, etc.) You should always play the "what if" scenarios. Let the client decide what best for her based on the information provided.

Oct 20, 2009 12:34 PM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Ask the mortgage broker what happens when the clients end up paying more and they ask, why didn't you tell us there was a chance the rates could go up. (There is always a flip side of the coin)

Todd Clark - www.LivingBeaverton.com

Oct 21, 2009 07:31 AM

Sara Abbas

Realty Austin - Cedar Park, TX

CNE, CDRS - 512-522-4990

I think it's all about how you present the information. Buyers don't necessarily deal with mortgage rates day to day, so they may not know how a half-point or point change would affect the numbers. There are definitely some agents out there who use this as a scare tactic and hard sell, but as long as you're using it to allow clients to make an informed decision, I think they'll value the insight, particularly since it can have such a large impact on them financially.

Oct 22, 2009 06:59 PM

Eric Newman

Directors Mortgage, NMLS-3240 - Clackamas, OR

Loan Officer with 25yrs in Housing, NMLS-97776

Education is the MOST IMPORTANT part of meeting a client's expectations, as education is what helps them SET their expectations. If your broker won't help you with a simple request like that, then you need to find another one that does, and one that focuses their attention on Realtor's needs. I spend an immense amount of time educating Realtors, knowing that they forward my information to their clients.

When your buyer realizes how fast rates can change AND what causes the changes, not to mention the impact to them ... they begin to take control of their own financial destiny. I have had great conversations with my clients that have learned through my teaching to follow the markets and know when it's the best time to lock. And the best part is that I don't get blamed when rates go up!

Get in touch with me separately and we can discuss further. thanks!

Oct 23, 2009 11:10 AM

Lynn Krogseng

Keller Williams Premier Partners - Vancouver, WA

Lewis, Thank you for the confirmation. I think the best way to deal with the unknown is with information.

Oct 24, 2009 02:29 PM

Todd, I agree with you. It's scary not to have the information you need to make good decisions.

Oct 24, 2009 02:32 PM

Sara, You are right about that - we can scare our clients or educate them with the same facts. For me, it's usually I have to worry that I'm not boring them with too much information.

Oct 24, 2009 02:35 PM

Eric, I'm with you - education is really important and what we know as professionals is excactly what our clients rely on us to help them with. I appreciate your willingness to help with information.

Oct 24, 2009 02:42 PM

Scare Tactics or Education?

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