How to get buyers off the fence in today's market

Reblogger Alan Langstone
Services for Real Estate Pros

Original content by Jim Paulson DB-17066

Many Realtors around the country are facing the same problem - how to get buyers off the fence and commit to buying a home!

I have had more luck recently conceding that prices may in fact keep dropping a little, but am able to show my clients why it can still make sense to buy now!  For example, stock brokers quit aspiring to help you buy low and sell high since they were always getting beat up for not buying at the lowest and selling at the highest!  They started telling their clients to just "buy now and sell higher later" so they wouldn't get blinded with hindsight later.

For example, here are two scenarios:

  1. $250,000 mortgage today @ 5% = 
    Monthly Payment:
    $1,342.05 (Principal & Interest ONLY)

  2. If your buyer thinks the property values will decline 5% more in the next year, just agree with them! Then the mortgage would be $237,500 instead of $250K.  Because you agreed with them that things are still eroding, they might agree that interest rates will go up due to additional economic concerns so figure the same house at the reduced mortgage but increasing interest rates to 6%.  $237,500 mortgage at 6% = 
    Monthly Payment:
    $1,423.93 (Principal & Interest ONLY)

Therefore, by waiting for prices to drop another 5% due to the economy and if interest raise only 1% your effective payment is going to increase $81.88.  The effect of the payment increase will drop your buying power by roughly $13,500 at 6% so you wouldn't even be able to buy as nice a home!

Oh by the way, if you don't close by November 30th of this year, you also loose the potential $8k First Time Tax Credit!

Jim Paulson, CRS, GRI,
Certified EPRO Instructor and Home From Work Instructor
Owner/Broker - Progressive Realty Corporation
Specializing in Boise Idaho Real Estate
http://www.IdahoMLStours.com
Http://www.Progressive-Realty.info

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Lori Bowers
La Quinta, CA
The Lori Bowers Group

You are right on target. We have been telling people that in a year. Many do understand and many are still greedy thinking the $1342 will go down even more.

Aug 20, 2010 02:13 AM #1
Rainer
29,511
Frank Beckendorf
Beckendorf Realty Group - Abilene, TX

I don't deal with buyers, except through my listings. I send all my leads to my agents..

Aug 20, 2010 02:16 AM #2
Rainer
33,485
Travis Behem
Jane Rowe Realty - Terre Haute, IN

Great point and showing the numbers, sometimes it is better for a client to see the numbers and see what payments would be on the home youre trying to sell them, because you're right getting buyers off the fence is not the easiest thing to do right now.

Aug 20, 2010 02:29 AM #3
Rainer
147,952
Don Spera
CR Property Group, LLC - East York, PA
Serving York and Adams County, PA

A wise instructor one day said the best way to get people off the fence is to sharpen the post.  In other words, find something in your bag of tricks to make the sale more lucrative, whether it be a better financial program, seller incentive, lender assist etc..........

Aug 20, 2010 02:31 AM #4
Rainer
146,975
Gary Pike
Better Homes and Gardens Real Estate Metro Brokers - Powder Springs, GA

It seems that the best way to get buyers off the fence in this market is to have interest rates go up so they start to fear they are losing out.  Thanks for posting and have a great day.

Aug 20, 2010 03:02 AM #5
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