Prospective homebuyers are a diverse breed. There are those who know what they want and will make a good offer the minute they find a home meeting their criteria. There are those who need to buy right now, perhaps due to a job relocation, retirement or divorce. And then there are those who sit on the fence. This category of buyers might love the house, but they won’t commit to making an offer.
Fence-sitting can have its place. When inventory is high, as in a buyer’s market, urgency tends to hit an all-time low. These buyers might believe that prices will drop farther the longer they wait and, in some cases, this strategy will be correct. In the post-bust years of 2007-2010, the hesitant buyer might have saved a few dollars by waiting for the market to bottom out.
Now that the market is on an up-swing, delays can be costly. With prices and mortgage rates rising, it makes sense that buyers snap up a suitable home before they are priced out of the market. Yet many are still procrastinating — attending showings and giving positive feedback about the homes they view, but failing to put in a bid.
What can you do to get them to pull the trigger? First off, you need to understand what is holding the reluctant buyer back.
Why Prospective Homebuyers Say “Maybe”
Reasons for the dreaded “maybe” are as long as they are broad, but in general buyers procrastinate for one or more of the following reasons:
- They are worried about market conditions and are sitting on the fence to see which way prices, interest rates and employment figures will go.
- They have a house to sell and need a good deal on the buying end to make the financials work on the selling end.
- The fear of purchasing an overpriced home in an overheated neighborhood that may be tough to re-sell if prices sink or stabilize.
- They are not sure what they really want from a home and are nervous that a better property might come along.
It’s the seller or real estate agents job who represents the buyer really to figure out why the buyer is sitting on the sidelines and overcome their reluctance.
Let’s address the objections in turn.
“I’m worried about the economy”
Some home buyers rightfully will be concerned about the economy. If their job is unstable, it would be unwise to invest in a new home. Compassionate agents should recognize the buyer’s predicament. It would be wise for the seller to turn their attention to other, more qualified buyers while the agent works with long term goals with these buyers. These type of buyers can fill a great pipeline for later business for the real estate agent. However, if worked too hard to encourage them to ‘buy now’, and then they lose their job right before the property closes, everyone loses: buyer, seller, and agent.
Often, however, a buyer has objections that are grounded in fear, not fact. For these buyers, it is worth pointing out that when it comes to buying a house, sitting on the fence can be costly.
Data is important and the agent needs to know their market. The buyer needs to be educated on what happens if they “wait”. With a market that has increasing property prices and mortgage rates, buying now would be a wise decision.
Another way of looking at it is this: waiting around means you need significantly more in income to qualify for a median-priced home. So it not just a question of the home costing more, it is a question of whether the buyer could afford to buy the home at all in two, four or six months’ time.
“I’m worried that the price isn’t right”
Being ready, willing and able to buy means the buyer must have the cash, equity or mortgage commitment. Yet how often do sellers and their agents meet buyers that they eventually discover are not able to buy in the first place — or at least not at the price you are offering?
The truth is you need to take a collaborative approach on “the money” question. Speak to buyers who have done their homework and have a pre-approval (as opposed to a basic pre-qualification) letter in tow. This automatically will rule out the buyers who are a few thousand dollars away from being serious.
If the would-be buyer has the down payment and a loan approval, but lacks the funds to close, you could offer to pay closing costs or mortgage points. Yes, these concessions will eat into your profit. But in the absence of a better offer, less profit is better than no profit at all.
“I’m worried that a better home might come along”
Some home buyers are like unicorn hunters — always looking for the perfect home that almost certainly does not exist. Unfortunately, “better home syndrome” is the most difficult objection to overcome. It is founded on the buyer’s personal reasons for moving or owning, and those drivers tend to be the most intransigent.
Homebuyers need to feel that they have made the right decision as they part with what is probably the most money they will ever spend in their life. Using “WIIFM” (what’s in it for me?) as a basis for your conversations, your agent should try to establish:
- Why is a home purchase so important to the prospective buyer?
- Why have they chosen this neighborhood, this street, this style of home?
- What kind of lifestyle are they looking for?
- What are their practical requirements in terms of transport, commute times, schools, shopping?
- What are the potential consequences if they do not make an offer on this home?
You then need to show how your home meets the criteria and perhaps remind the buyer of the features that are important and of highest benefit to them. By remaining open and honest, you help get the buyer mentally and emotionally ready to make a decision.
Buying a house is a big decision, and some buyers get so wrapped up in the concept of making the right decision that they end up making no decision at all. As a seller or as the sellers agent, it’s worthwhile helping buyers overcome their home-purchase objections. By giving them a more complete picture of the housing market, home and neighborhood, and being flexible on price, you can help buyers make an informed decision and gain the confidence to jump into the game.
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