Buy Now? Absolutely! 9 Ways to Get Buyers Off the Fence
Need a plan to motivate buyers to make that offer? We’ve got some surefire ways to get the market moving.
“We have a little buyer hesitation because buyers don’t think the bottom’s here yet,” says Wanda Duke, ABR, a partner at Crye-Leike Coastal Realty in Destin.
That simple understatement sums up the state of the market in many Florida cities today. You have a tough job. You tell ready, willing and able buyers about the great interest rates and vast inventory until you’re blue in the face, but they’re still reticent. Just how do you get buyers off the sidelines and back onto the real estate playing field? Here, real estate professionals offer their best techniques for accomplishing that feat. 1. Show the cost of waiting.
Don’t just tell buyers they’ll save money with today’s low interest rates. Show them the numbers, advises Bernice Ross, CEO of www.RealEstateCoach.com in Austin, Texas. “If they wait, interest rates will eventually creep up again,” she explains. “Give buyers examples that illustrate how expensive even a 1-point interest rate increase can be.” For example, on a $200,000 loan, an increase from 6 to 7 percent costs an additional $131 per month and $47,340 over the life of the loan. On a $400,000 loan, the same increase costs buyers an additional $263 per month and $94,680 over the life of the loan. 2. Highlight the bargains.
“My tactic is to show buyers properties that have become bargains or that illustrate how much further their money can go,” says Marilyn Kagan, a sales associate at Charles Rutenberg Realty in Clearwater. “I’ll find a bargain and send buyers a personal note saying, ‘This is a great opportunity. A year ago, we were looking at a 2,000-square-foot home for you, and now I can show you a 2,500-square-foot home [in the same price range], and get you a pool, too.’” Or Kagan might say, “This is the first time I’ve been able to bring you into this neighborhood, and I won’t be able to show you this neighborhood again when the market turns back around.” 3. Whatever the problem, fix it.
“We find out the buyers’ objections and overcome them,” says Bradley Chais, a sales associate at Keller Williams Tampa Properties in Tampa. For instance, he just closed a sale in which the buyers initially said they needed to wait six months before getting serious. Chais learned the problem was that they were stuck in a lease until then, and he proposed that the sellers buy out the lease. That cinched the deal.
The sellers got a full-price offer minus about $14,000 to cover the lease buyout and some of the buyers’ closing costs, which shaved about 5 percent from the sellers’ list price. “The sellers were thrilled to take 5 percent less than their asking price,” says Chais. 4. Be straight with wavering buyers.
Remember that your job isn’t just to get buyers to buy. It’s also to help them sort out the type of property for which they’re looking. If buyers are poking around but aren’t sure whether to buy, Carlos Garcia, CRS, GRI, a broker and vice president at The Keyes Co./Realtors in Miami, helps them do their homework. “Buyers who want to live in a high-rise condo in Miami are in a good position to catch a preconstruction price—even though the building is finished,” he explains. “But I [tell] them to do their due diligence.”
Garcia makes sure buyers ask about the developer’s credentials and financial well-being, the building’s reserves and its owner-occupancy rate, and whether lenders are still lending for that building or have blacklisted it because values have dropped.
“The fact that a property is at a great price doesn’t mean it’s a great [deal],” he explains. “I want buyers to be clients in the future, not just for the short term.” Even if buyers don’t buy, they reward Garcia with referrals. “Buyers recognize this value-added service,” he says, “and they send me referrals of family and friends.” 5. Focus on what you can change, and don’t gloss over what you can’t.
Two hot issues in Florida right now are property taxes and insurance. Linda Risden, GRI, a broker at Florida Five Star Realty Inc. in Coral Springs, explains that the recent passage of Amendment 1 will benefit buyers who have been in their homes for a long period of time but are ready to move. (For more information about Amendment 1, see “Property Tax Legislation: Getting Buyers to Buy” on page 18.)
On the insurance side, sales associates can’t offer much, so they tell it like it is. “High insurance costs are going to be part of South Florida from now until forever,” says Risden. Garcia echoes the sentiment. “I tell buyers that if they want to live in Miami, they have to live with it. It is what it is.” 6. Make a reverse offer.
“When buyers look at our listing more than once, we’ll recommend that sellers do a reverse offer,” says Chais. “I’ll say, ‘We have an interested party. What if I could sell your house and you could move in the next 30 days? What would be the price you’d be comfortable with?’” Using that figure, sellers will make the buyers an offer at that price. “Buyers appreciate the offer and know the seller is motivated,” explains Chais. Even if the tactic doesn’t work, however, it can help get sellers comfortable with a price reduction. “We tell sellers, ‘That was a great offer; unfortunately, it didn’t meet the buyers’ needs. However, let’s tell the world about this great price reduction,’” says Chais. 7. Remind buyers that market conditions can change quickly.
“We tell buyers that there’s a window of opportunity that won’t last very long,” says Charles Ashby, CRB, CRS®, president of VIP Realty Group in Naples. “There can be a huge swing in interest rates—they can go from 5 percent to 10 percent real quickly.”
Duke agrees. “I tell buyers that if they’re looking for a deal and don’t think the bottom’s here yet, they might miss the mark,” she says. Phyllis Frankel, GRI, CRS, broker-owner of Phyllis Frankel Realty Group in Ponte Vedra Beach, makes the point with stock market analogies. “I tell people that real estate is like the stock market—you’ve got to be a contrarian. When people are sitting out, that’s the time to buy,” she explains. “Also, you’re never going to hit the bottom of the market because the bottom turns so fast. But even though you may not buy at the bottom, you’ll get a good deal.” 8. Show them how much they have to choose from.
“My company tracks statistics over a 15-month period for any given area—whether it’s 1 square mile or a subdivision—to show what’s happening in the area,” explains Patricia Ambrose, GRI, a sales associate with Esslinger-Wooten-Maxwell, Realtors in Pinecrest. “Typically, we use that data with sellers, but I’ve reversed it and use it with buyers to show there’s incredible inventory and that it’s the perfect time to buy.” 9. Know which buyers you can reach and which you can’t.
It’s tough to get buyers back in the market, but some simply can’t be reached. Be able to identify those so that you can spend your time with the ones who are most likely to buy, says Floyd Wickman, founder of Floyd Wickman Team LLC in Easton, Mass. “You have to be tough with buyers up front,” he advises. “Raise your standards with the buyers you’re going to work with, and you’ll solve a lot of problems later on. If they’re not already prequalified, ask them to come into the office to be prequalified before showing them the property. You may also want to see if they’re willing to disclose how much they’re willing to spend.” G.M. Filisko is a Chicago-based freelance writer.