An Agent’s Guide to Creating Urgency to Buy

An Agent’s Guide to Creating Urgency to Buy
Breakthrough to Mastery An Agent’s Guide to Creating Urgency to Buy Buyers’ Market = Right Time to Buy Version: 3 Revision Date: August 2008 Note: For maximum impact all attendees should have their own copy of An Agent’s Guide to Creating Urgency to Buy. © 2008 Keller Williams Realty Inc.

Main Ideas Perspective on Buyer Urgency Prequalify Buyers: Are they Able, Ready, and Willing? Become the Local Economist of Choice Help Buyers Tap Into Their Why Address Buyer Reluctance The Bottom Line This is an overview of what you’ll cover in the presentation. © 2008 Keller Williams Realty Inc.

Perspective on Buyer Urgency
An Agent’s Guide to Creating Urgency to Buy Perspective on Buyer Urgency The Challenge The media creates misconceptions about buying homes today. Buyers fear paying too much. Buyers don’t have any sense of urgency. Many agents think it is not a good time to buy. The Issue: Regardless of market conditions, the ability to get buyers to buy in a reasonable period of time can increase the number of customers you serve. This is particularly important in a market where the total number of transactions is down and competition for sales is high. The Challenge: Buyers are hesitant to make a purchase decision when they know property values are falling and the economy is uncertain. Page 7 © 2008 Keller Williams Realty Inc.

Perspective on Buyer Urgency (continued)
An Agent’s Guide to Creating Urgency to Buy Perspective on Buyer Urgency (continued) The Truth People are buying and selling homes in this market. No one can truly “time the market.” Truth: People are buying and selling homes in this market. No one can truly “time the market.” Key to success with buyers: Find people who are motivated and know how to get them to buy without taking an unreasonable amount of your time. Page 8 © 2008 Keller Williams Realty Inc.

Perspective on Buyer Urgency (continued)
An Agent’s Guide to Creating Urgency to Buy Perspective on Buyer Urgency (continued) The Solution Prequalify buyers Work with buyers who are able, ready, and willing Become the local economist of choice Help buyers tap into their why Address buyer reluctance This is a time for buyer agents to provide leadership for their customers. As Dwight Eisenhower said, “Leadership is the art of getting someone else to do something that you want done because he wants to do it.” This is a BUYERS’ MARKET. By definition, it is a great time to buy! Page 12 © 2008 Keller Williams Realty Inc.

Prequalify Buyers (continued)
An Agent’s Guide to Creating Urgency to Buy Prequalify Buyers (continued) Common Reasons for Buying Relocation Dissatisfaction Life changes Second home Home sold Lease ending Investment Begin the prequalification process by determining their ability to buy. Next, determine their readiness by understanding why they are buying. Here are some common reasons for buying. Page 15 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Prequalify Buyers (continued) Determine Willingness Ask … “Do you want to risk missing a house that is perfect for you because you’re waiting for a sliver of savings that may or may not be there?” The third step in the prequalification process is to determine willingness—whether your buyers are committed to moving forward with their purchase. Page 17 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Prequalify Buyers (continued) Impact Their Urgency Three Tactics Become the local economist of choice Help buyers tap into their why Address buyer reluctance Now you can change your buyer’s urgency with these three tactics: Become the local economist of choice Help buyers tap into their why Address buyer reluctance Page 17 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Prequalify Buyers (continued) Able, Ready, and Willing? What questions will you ask to determine if your buyer is able, ready, and willing? Ask agents what questions they currently use to determine able, ready, and willing? Page 18 © 2008 Keller Williams Realty Inc.

Be the Local Economist of Choice
An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice Invest Time in Research Top Dollar-Productive Activities Lead Generation Lead Follow-Up Appointments with Prospects Negotiating Contracts Market Research People will buy homes when they feel comfortable with this big decision. Information you share about the local real estate market and the economy can ease fears and make buyers feel comfortable. To be an expert on these topics, you must spend time doing market research. How to become the market expert or the local economist of choice is the first topic we’ll discuss. Page 19 © 2008 Keller Williams Realty Inc.

Be the Local Economist of Choice (cont)
An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) The Tale of Two Markets In the Market Out of the Great Poor Condition vs. Comps Above Below Price vs. Comps The concept of two markets is often used to get sellers to price their home correctly. In addition, it is an important concept for buyers’ agents because buyers will buy homes that are IN the market. This concept was developed by Brian Hickox of Franklin, Massachusetts. The way Brian describes his market is true for other locations. Houses that are priced right and in great condition are IN the market. They are the homes that sell. Houses that are merely on the market – as opposed to IN it – are priced higher and/or don’t show as well as the competition. Those houses stay on the market for a long time and go through a series of price reductions as they chase the market down. Page 20 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) The Tale of Two Markets: Sellers’ Market Great Poor Condition vs. Comps Above Below Price vs. Comps In the Market Out of the In a sellers’ market there is high demand for homes and almost everything sells—lots of homes are IN the market. Page 21 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) The Tale of Two Markets: Buyers’ Market Great Poor Condition vs. Comps Above Below Price vs. Comps In the Market Out of the When the market shifts, many sellers still think they can get higher prices and condition does not matter. Contrary to that opinion, the market is more competitive. There are many more choices. Because buyers have a large selection, they can be picky and they will only buy the houses at the best price and in the best condition. As a buyers’ agent, you need to help your customers sort through the houses that are OUT of the market. Buyers won’t buy them, but they will buy houses that are priced right and in great condition. You provide value when you save buyers time by helping them find their needle in the haystack. When you show a house that is IN the market, make sure your buyers know the best houses sell fast in any market. Page 22 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) Good Time to Buy Reasons to Buy Now Mortgage interest rates are low and stable Home prices have become more affordable Inventory is high Strong economy Low unemployment Compelling reasons to buy property change as the economy and local housing market fluctuate. Agents need to pay attention to the news to become knowledgeable about the economy. Buyers often have fears about economic conditions. Your ability to assuage those fears can help your customers feel comfortable with a decision to buy. “It’s never a bad time to buy good real estate.” Gary Keller Page 24 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) Mortgage interest rates are low and stable. Mortgage Interest Rates 1971 – 2007 30 Year, Fixed-Rate Mortgage Low interest rates make this a great time to buy. Interest rates are near the lowest point since 1970. Buyers may say they are hesitant to buy now because they think rates will drop further. Assuage the fear: “Comparing current rates to the past thirty-five years, what is available now is good, and history shows that rates have rarely been better. When rates have been lower, it’s not by much. What we do know is that rates are about the best they have been in a long time.” Source for this and similar data: Source: Freddie Mac Page 26 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) Home prices have become more affordable. U. S. Home Price Index 1976 – 2007 Year-to-Year Change Nationwide, average home prices increased dramatically from 1991 through 2005. Prices began to drop in 2005 and are now comparable to prices in the mid-1990s. Buyers may not want to buy because they think prices will drop further. Assuage the fear: “No one can predict when prices will hit bottom. We only know prices hit the bottom after they start to rise again, and then it is too late to buy at the lowest point. We know homes are selling for less than they did in the past. Combined with sellers who are willing to make concessions and low interest rates, this is a great time to buy.” Source: Office of Federal Housing Enterprise Oversight Graph shows percentage change since the prior quarter. Source: OFHEO Page 27 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) Inventory is high. Supply and Demand Shifts 1989 – 2007 Existing Home Sales Buyers Market Sellers Market Months Millions Housing Inventory The increase in home prices that happened in the 1990s ultimately resulted in a lower number of affordable homes. When people cannot afford to buy homes, inventory increases. As inventory increases, prices drop. We’re at a point where prices are reasonable and inventory is high. Buyers may think something better will come on the market in the future. Assuage the fear: “In this market, like any other, the best houses sell fast. Buyers who wait get to select from the leftovers.” Source: National Association of Realtors Source: National Association of Realtors Page 28 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Be the Local Economist of Choice (cont) Becoming the Expert What tools do you use to communicate your knowledge of the economy and local market? Where can you get reference information you need? Page 30 © 2008 Keller Williams Realty Inc.

Help Buyers Tap Into Their Why
An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why Features vs. Benefits Features—amenities Fireplace Pool Large master bedroom Benefits—affect emotions Quiet Cozy Spacious Buyers may think that features such as a fireplace or swimming pool will improve their lives. However, remember that it’s the benefits that affect their emotions and truly improve their lives. Don’t focus on home features—focus on the benefits! Pages 31-32 © 2008 Keller Williams Realty Inc.

Help Buyers Tap Into Their Why (cont)
An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Advantages of Home Ownership Build equity Tax break Investment A home is a forced savings plan. A home is a tax deduction. A home is unlike any other investment—you can enjoy the use of it forever. Page 32 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Cost of Waiting to Buy Delay of tax benefit Delay of building equity in new home Need to view more homes Selection of best homes is limited Market will shift and great buys will be gone Buyers should think about the cost of delaying a purchase. Page 33 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Buyers Who Want a Deal Learn their definition of deal Communicate the consequences of some “deals” A “deal” is not always a deal, or what the buyer truly wants. Page 35 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Remove Fears Fear of paying too much CMA Appraisal Fear of making a commitment Option period Buyback guarantee Buyers won’t make a purchase when they have fears or doubts about the decision. Always ask what questions, fears, or doubts they have. Assuage the fears so they’ll be willing to buy. Common fears are paying too much and making a commitment. Do a CMA and remind them about the appraisal to alleviate fears about paying too much. Explain that signing a contract allows them to essentially reserve the house while they do inspections to learn more about it before the contract is finalized. Some top agents offer a buyback guarantee to ease fears about making a bad decision. Pages 36-37 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Incentives and Concessions Improvement allowances (carpet, paint) Pay early move-out on renter’s lease Pay mortgage on buyer’s home for a period of time Pay buyer closing costs Lease-purchase options Mortgage buydowns Seller financing Extras (electronics, car) When there is a lot of competition, sellers are often willing to make concessions. You need to ask in order to find out what concessions sellers are willing to make. Ask for whatever will make the biggest difference for your buyers. Page 38 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Close “Is this a house you want to buy?” “Good houses sell fast in any market.” “How would you feel if someone else bought this house tomorrow?” “If you love this house, someone else will too.” Never forget the importance of asking if buyers want to purchase a house you have shown. Page 39 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Help Buyers Tap Into Their Why (cont) Helping Buyers Tap Into Their Why What will you say to remind buyers of their wants and needs? Ask agents what they say when buyers see a house that is a good fit for them. Ask what incentives or concessions agents are currently seeing. Page 40 © 2008 Keller Williams Realty Inc.

Address Buyer Reluctance
An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance Four Strategies to Overcome Buyer Reluctance Why wait? Trade up Less is more Find a best buy These strategies will be discussed further in upcoming slides. Page 40 © 2008 Keller Williams Realty Inc.

Address Buyer Reluctance (continued)
An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Why wait?—the hazards of timing the market Drop in home price is offset by increase in interest rate. Home Price Starting Price $200,000 5% Drop $190,000 10% Drop $180,000 Interest Rate Starting Rate 6.0% .5% Jump 6.5% 1% Jump 7.0% Payment $1,199 $1,201 $1,198 A common objection from buyers in a declining market is that they want to wait for home prices to drop further. They believe a lower purchase price in the future will mean lower mortgage payments. Do a financial analysis similar to the one shown here. Demonstrate that an increase in the interest rate could offset a decrease in sales price, meaning the mortgage payment might remain the same. If interest rates jump quickly, buyers could even end up paying more. The table shows a comparison for mortgage payments using a home price of $200,000 and an interest rate of 6 percent: Scenario 1: Home prices drop by 5% and interest increases by 0.5%. Scenario 2: Home prices drop by 10% and interest increases by 1.0%. Page 41 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Trade up—the opportunity of a down market Lower sale price is offset by greater savings. Original Home Starting Price $200,000 5% Drop in Home Prices Sell at $190,000 Loss of $10,000 New Home Starting Price $400,000 Sell at $380,000 Savings of $20,000 Explain to buyers that although they’re selling their original home for less than they could have a couple of years ago, the home they’re purchasing is at a strategic price point that more than offsets the loss on the original, less expensive home. Page 43 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Less is More—Narrowing the Field Know what they need and want Know the best buys in the market “If you show buyers what they want, they’ll be motivated to buy.” Steve Cohen Boston, Massachusetts Buyers change their minds once they start looking at what’s on the market. Use the first few showings as an opportunity to understand more of the buyers’ wants and needs. Pages 44-46 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Know the Inventory Reasons to Preview Homes Save yourself time and gasoline Take customers directly to the best buys Buyers have confidence in you when you only show houses that meet their needs and wants To be an expert on your local real estate market, you must preview homes and know what’s for sale. When you know the market, you can take buyers to see only the best homes and the ones that meet their criteria. When you take buyers to see only the best homes, they gain confidence in your expertise, learn to trust you, and will take your advice. If inventory is so high that you cannot preview every home on the market, target your previewing. Focus on homes around your listings. Choose a segment of the market where you get the most business: a geographic area, a price or size range, or a category of property such as townhomes, golf communities, or waterfront properties. Page 46 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Find a Best Buy—Get While the Getting’s Good Where to Find Best Buys REOs HUD Exchange Foreclosure lists FSBOs Price reductions in the MLS New homes on the market Builder’s promotions There are best buys in every market, and these are the ones your buyers’ want to see. Know where to find the best buys and stay up on them daily! Pages 48-49 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Create a List Nominate homes that you consider “best buys” Be on the lookout for special offers from builders and other sellers Create a short list of the best of the best Each neighborhood has its best buys. It is your job to find them for your buyers. Best buys are houses that are IN the market. A best-buy list is a great marketing tool to attract buyers and makes you aware of properties that customers are most likely to buy. Use a variety of resources to find the best buys and then preview them. You may want to create a best-buy list for a variety of price ranges. Page 49 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Do Your Homework Track Your Best Buys Time on market List price Condition Selling price Once you have a list of properties, keep track of what happens to them. If they sell quickly, you have truly found the best values. Keep your best-buy list current by updating it every day. Creating and maintaining a best-buy list takes a lot of time and effort. If you are a solo agent and have trouble doing all of this work, consider creating and sharing a list with another agent. Page 49 © 2008 Keller Williams Realty Inc.

An Agent’s Guide to Creating Urgency to Buy Address Buyer Reluctance (continued) Use Your List Don’t give the list out, offer access to the best buys. Show houses on the list to your customers—these are the houses that will sell fastest. Advertise your best-buy list on your website and in print ads. Don’t offer to give the list to people. Offer access to your list. If you give the list away, you give away part of your value and expertise. Access to best buys is a reason buyers want to work with you. Script: “Mr./Ms. Buyer, not every home on the market is a good buy. But there is a set of homes that really are, based on their price, their condition, and the motivation of the seller. I’ll take you to see those homes and you have to be ready to act. When a house fits your criteria and it’s a best buy, that’s when you buy. You can’t expect the price to come down in the future because only the overpriced homes will come down. The ones that are currently priced right are being bought.” Page 50 © 2008 Keller Williams Realty Inc.

The Bottom Line Prequalify buyers Only work with buyers who are able, ready, and willing Become the local economist of choice Help buyers tap into their why Address buyer reluctance This slide summarizes what you have covered. Page 52 © 2008 Keller Williams Realty Inc.

Productivity Boosters
An Agent’s Guide to Creating Urgency to Buy Productivity Boosters Consult using buyer guides Apply action plans to stay in touch Use mass with hyperlinks to your website Use an IVR number and capture each caller The ProManage/TOP PRODUCER contact management system has many tools to boost your productivity. For more information visit the ProManage site on the KWU Intranet: Click on the eAgentC tab, and then click on ProManage/TOP PRODUCER. Page 53 © 2008 Keller Williams Realty Inc.

My Action Plan Don’t put away this guide without developing a plan to put what you have learned into action! Refer to the Action Plan on pages 59-61of the guide to assess your strengths and areas for improvement. Write down steps you will take to improve your skills—complete it, share it, and commit to it! Instructor: Direct participants to fill out their Action Plans on pages of the guide. Ask them to share their commitments with the class. Pages 59-61 © 2008 Keller Williams Realty Inc.

Take the other courses in the Breakthrough to Mastery Guide series!
An Agent’s Guide to Creating Urgency to Buy Take the other courses in the Breakthrough to Mastery Guide series! Gaining Mind over Market Upshifting Your Lead Generation Seller Pricing Strategies Seller Staging Strategies Lead Capture and Conversion Internet Lead Capture and Conversion Bulletproofing Transactions Expense Management Effective People Leverage Short Sales, Foreclosures, and REOs Financing Solutions © 2008 Keller Williams Realty Inc.

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