Creating Urgency to Buy

With all the national spot light on the real estate market thanks to the negative press from the media, finding buyers in this market and getting them to buy can be a challenge. With this challenge, here is some sage advice in how to create urgency in this all to scared market segment.

First, some perspective on buyer urgency.

1. 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

1. The Solution

• Find and work with motivated buyers
• Be an expert on the economy
• Be an expert on your local real estate market
• Listen to your buyers
• Find houses priced correctly and in good condition
• Show buyers homes that match their needs and wants
• Assuage fears about buying
• Find solid financing

So how does one become and EXPERT in the market

1. Invest time in research
2. Know the inventory of your farm and surrounding area by previewing properties each and every week. This will save yourself time and gasoline when you take buyers out
3. Take customers directly to the best buys
4. Buyers will have more confidence in you when you only show houses that meet their needs and wants

Create a BEST-BUY LIST

Where do you find the BEST-BUYS

1. REO's
2. HUD Exchange
3. Foreclosure Lists
4. FSBO's
5. Price reductions in the MLS
6. New homes on the market
7. Builder's promotions

Do your homework and track your best buys

1. Time on the market
2. List Price
3. Condition
4. Selling Price

Use your list

1. Don't give the list out, offer access to best buys
2. Show houses on the list to your customers - these are the houses that will sell fast

During the buyer consultation, you need to remember the following:

1. Ask about their needs and wants
2. Ask about their motivation and urgency
3. Listen to what they tell you
4. Discuss advantages of home ownership

When preparing to show what they can buy, remember the following:

1. Know what they need and want
2. Match their needs and wants to best buys
3. Get their feedback on homes

To facilitate their decision making process, keep the following in mind:

1. What they need and want
2. How features will improve their lives
3. Their motivation
4. Cost of waiting

Remove their fears of buying by:

1. Providing a CMA on each property that they are prepared to make an offer on
2. An appraisal

To help eliminate their fear of commitment, offer the following:

1. An option period to back out
2. A buyback guarantee
3. An offer to sell it for free within 1 year if they are not satisfied

To help them in their offer, consider these terms to make the deal fly:

1. Improvement allowances (carpet, paint)
2. Pay early move-out on renter's lease in the offer
3. Pay mortgat on buyer's home for a period of time
4. Pay buyer closing costs
5. Lease-purchase options
6. Mortgage buydowns
7. Seller financing
8. Extras (electronics, car)

The bottom line

1. Be an expert
2. Educate your buyers
3. Articulate why this is a great time to buy
4. Assuage buyers' fears
5. Create a best-buy list
6. Show houses that meet your buyers' needs and wants
7. Facilitate a decision to buy

Happy Production

How to Stay Up in a Down Market

It has been a while since my last posting. Mostly because I went to the annual Keller Williams Realty family reunion in Atlanta, GA. Not only did I come back with a whole host of ideas for postings that I will be putting up in the next few weeks, but I also came back with the flu bug that has hit this country hard. That said, waaaaaahhhh, I am behind so bear with me as I share some great information with you over the next few postings.

My topic today is "How to Stay Up in a Down Market". It is apparent that the real estate market has shifted across the entire country and all agents are feeling its effect. But there are certain things you can do to get you through this time that will help guarantee your long term success in this business.

Here is a list in no particular order of importance, but things you need to remember as you go through your day. I'd like to credit alot of what I have hear from my colleague Rosemary West of the Rosemary West Team in Joliet, IL.

1. Bottom line is that your potential clients and prospects are looking to you as a leader. They are looking for someone whom they can trust to get their home sold or find them a great deal. We are here to educate our buyers and sellers. So, instead of painting a picture of doom and gloom, paint a picture of how smart money is buying this time so if you are in the market to buy, this is the time. And if you are in the market to sell and buy, you might not get what you could have 3 years ago but you will make up for it on the buy side.
2. Have a pro-active marketing plan for your potential listings. Be the expert and be prepared to spend the money necessary to get your listings sold. You have to be a problem solver and you have to be educated about the market in order to get a home sold. Know your comps for all your listings so you can price them accordingly to attract buyers. Well priced homes in great condition do sell in this market.
3. Don't take a listing from someone who is unrealistic about their price range. Be prepared to walk away and tell them that you hope they keep your name and number should it not sell with their first agent. This is critical. Listings require a lot of effort and it makes no sense to put this effort in if you price it too high.
4. Be busy doing the right things. What I mean by this is do the activities that are revenue producing. You have heard me talk about the 80/20 rule. 20 percent of your activities produce 80 percent of your results. The other 80 percent is just stuff that doesn't make you money like paperwork, answering emails, developing flyer's, marketing plans, etc. Only concentrate on the 20% that produces REVENUE.
5. Be the agent that knows the market value of a property. Overpricing a home is the oldest trick in the book just to get a listing. Be prepared to share this with a home seller and be prepared to walk away and wish them the best.
6. Be prepared with your very own Unique Selling Proposition. In other words, what makes you different than all other agents out there. Selling a home is no longer placing a sign in a yard and listing it in the MLS. It takes your strengths and abilities. It takes a great marketing plan to get a home sold. Have this down pat in your listing presentation.
7. Align yourself with your Core Advocates like a good mortgage broker, title rep and escrow company. If you are not asking these people for referrals, you are missing a great opportunity for referral business. After all, if you are sending business their way, they should be sending business your way. It's a two way street.
8. To capture buyers, use a great hook in all your ads like, "Ask me how you can save 1% on your first years interest rate on your new home purchase". People always want a deal and if this can entice them to call you, you should be prepared to explain to them how a seller contribution can buy down their rate for the first year and how you can write this in to their offer.
9. Show how you are prospecting for buyer's by actively marketing your listings. Show them all that you do to pursue every opportunity out there. Your marketing program should be a pro-active marketing program, not a passive marketing plan. By pro-active, I mean things like knocking on the neighbors doors to introduce yourself and telling them about your listing you have for sale in their neighborhood.
10. You get what you pay for. You deserve 6% commission in this market. Be prepared to only accept 6% and be ready to explain why now more than ever it is important to offer that full 3% to the cooperating broker.
11. Know how to explain to a listing what their home is NOT WORTH. It is not what they have in it, what the appraised value is, what it is assessed at, what they need out of it, what they want for it, what their neighbors house sold for, what it's insured for, what memories and treasures are in it or what the prices of homes are for where they are moving.
12. The true value of a home is, what buyers are willing to pay based on today's market, the competition, financing, perception of condition, economic condition, location, normal marketing time and acceptability to the market.
13. Explain how they can control the showing conditions, the price and the offering terms.
14. Be prepared to explain how you do not control the market, value or the motivation of their competition. You don't determine the market, you only analyze it. To explain this you can use the used car scenario. On a car lot, the shiniest car at the best price will be the one that gets the most attention.
15. Counteract what the media is saying by coming out with your own message. Be prepared to discuss all the good as you see it like:

• Foreclosures are great deals right now
• Quality homes in top condition that are priced right are still selling.
• Fixer uppers that can be stolen from investors who have too many mortgages on them.
• Buyers get what they want in most cases.
• Interest rates are still at historic lows.
• Seller buy downs can reduce first year interest rates to 4.5%
• Investors can tap in to their home equity to purchase properties at great steals.

16. Rosemary taught me this geat phrase and I'd love it if you listen and heed this advice. She says that you have to have skin in the game. Put your money where you mouth is and show your sellers how your are spending money to get homes sold. It shows you are in the business 100% and are stepping up to the plate and continue to market as you have in the past. When you go in to these houses, you can talk to them about this and say, just so you know, I have thousand of marketing dollars being spent in the game before I even get to the table to earn my commission. So I'm trusting in your that we can price your home competitively to make it shine and get the home sold.

17. Be willing to work the Expired Market. There is no greater time to call on Expired Listings as there are more now than ever.

18. Don't work short sales. They are a pain and you never know if they will close or what your end commission will be.

19. If you have a lead, then you better be on that lead like a banana on a split. Leads are so few and so precious these days that it requires you to be quick and responsive to every lead that comes your way.

20. Finally, you have to have a positive mental attitude. Whatever it takes, you have to get yourself in to the mindset that good things are happening. Clients and prospects will feel this in your voice and actions. They want you to know you are projecting a confident situation in these bad times.

Happy Production. More to follow in a few days.

Sellers wanting to wait for the market to come back???

Yes, how many times have you heard a potential seller or Expired Listing say they want to wait until the "market comes back." Great excuse but here is a way to overcome that objection.

Basically, you can talk about how every market cycles for about 7 years. In San Diego, this last cycle starting coming up in 1995. But in 2002, our wonderful banking system found a way to make it last longer, which I call the wonderful SUB PRIME discovery. Yes, believe it or not, I feel the banks are due what is happening to them. But that's another story. So, this cycle here as in probably most of the country topped out in 2005. Which means, if you do the math, 2012 is when it will start to rise again topping out again in 2019 provided the banks don't find another way or we forget about 2/28 hybrid-subprime financing.

You can also talk to them about unit volume. Annual home sales for a long time have been about 4.5 million annualy. Then all of a sudden in 2005 there were 7.1 millon in sales followed by 2006 with 6.48 million in sales. You can share this data with a client and ask them, "exactly which market are you waiting for to come back?" It will become obvious to them that they hey day years are an anomoly and that they might not happen again. It may be a long, long wait for the "market to come back."

Happy Production

Words to get a buyer off the fence and BUY in this Market.

I got this from my Mortgage Broker Heidi Odish and I had to share it with you as it really brings up the points about why people should buy. In all markets, we want to buy at the bottom. But as I have said in the past, the smart money knows when to buy and it is doing so. I see it all day long with investors back in the market buying up foreclosures and market funds out there scooping up big blocks of stock even though the stock market is having a rough ride. These are the times that SMART INVESTORS want you to think it is a bad time to buy while they go around and scoop up things at great savings.

A Good Time to Buy

With all the negative news about the housing and mortgage industry, many people are waiting to see what happens before they make a decision to purchase real estate. However, the time is right to purchase property NOW. There are three reasons why the time is right.

Interest Rates

Interest rates on mortgages have fallen substantially over the past 30 days. Rates on conforming 30 year fixed loans ($417,000 and below) have been ranging from 5.25% - 5.50%. Rates on Jumbo loans (amounts above $417,000) are also very good. For example, the rate on a 7/1 Jumbo Adjustable Rate Mortgage is currently at 5.50% with a 20% down payment. That means the 5.50% is fixed for 7 years before the loan converts into an adjustable rate mortgage.

Rates usually get better when the housing market and economy slow down. The interest rate markets typically anticipate what will happen in the future, so if the markets feel we are heading towards a recession, rates decrease. Many times they decrease before we actually get into a full recession. The same is true as we come out of a recession. The markets anticipate that we are going into a recovery and rates start to increase. In a lot of cases, when the Fed aggressively cuts interest rates, (as they are doing now) this actually causes mortgage rates to start increasing, because the markets believe that the aggressive cuts by the Fed will begin to spark the economy. Generally, by the time the public hears that the economy is starting to recover, rates are already moving up in anticipation of a recovery and they miss the bottom of the interest rate market.

Rates are now at levels that we have not seen since 2003, when rates hit all time lows. In 2003 and other periods when rates hit all time lows, these rates only lasted for a couple of weeks. Therefore, the “bottom” of the interest rate market is generally short lived.

It is important to understand that saving 1.00% to 1.50% on your interest rate today will save you thousands of dollars the first 5 to 7 years of your loan. These savings can be much greater than what you save by waiting for prices to drop further on real estate. Therefore, waiting for prices to decrease could actually cost you more in the long run if rates are higher when you find that “great deal”.

Mortgage Programs

During the last 8 months, we have lost many mortgage programs and it appears that underwriting guidelines for certain mortgages will continue to tighten. This means it will get harder for people to qualify for mortgage programs in the future. Therefore, if you wait to see what happens with real estate prices, a loan program that would be perfect for your situation today may not exist tomorrow. This is something that I always discuss with the agents that I work with to remind their clients. When the clients ask me what I think and if it is wise for them to wait another 6 months, I always advise that ultimately it is their choice, but they may be risking the possibility of completely being out of the market with special programs that they are pre-approved with today that may be eliminated in the near future. Programs that otherwise would enable them to get into the market at the current time. This is especially the case with a declining market and the fact of the matter is that San Diego is currently determined to be a declining market.

Market Timing

The third reason the time is right to purchase real estate has to do with market timing. Everyone would love to “buy at the right time”, meaning when prices are at the bottom. Whether it is stocks, bonds or real estate, we all want to buy low. However, it is very hard to know when prices have hit bottom.

Let’s look at the current real estate slow down as an example. By the time news of the real estate melt down was being broadcast by the media, the melt down was already in full swing. Many mortgage companies were already out of business, houses were not selling and prices were falling. These things were all happening for several months before the general public became aware there was an issue.

The same is true when the real estate market begins to recover. By the time the media begins to talk about real estate recovery and the general public learns that things are improving; prices are already on the rise. As a result, it is very difficult to “time the market” and buy at the bottom.