While the amount of bidding wars and frustrated buyers indicates many buyers are already in the market, there are a lot of reluctant buyers who’ve heard how cutthroat bidding wars can be, or have heard about homes going for thousands over list price.
Last week, RealTrends offered several strategies agents could use to give potential sellers that little nudge they need to put that listing on the market. This post will offer tips to get reluctant buyers to make the jump. While this market isn’t right for everyone, some buyers will benefit by acting soon. Here’s some data to help explain why, for some buyers, the frustration, competition and added up-front cost might be worth it in the long run.
It is rough and tumble out there for buyers right now. And it can be quite a challenge and with the low inventory, especially a departure from what buyers have been used to. Reluctant buyers are nervous to compete. They’re nervous about market conditions. They’re nervous that we are at the peak. They’re nervous of a repeat of the market crash of the late 2000s.
Do the math
Remind buyers who are concerned about another real estate bubble that in 2000, 2005 and 2010, interest rates were significantly higher on residential property loans. Experts predict we’ll see interest rates increase slightly throughout 2021, with some looking at 3.6%. For people looking for a home they plan to live in for three to five years, explaining the math can help them understand what would happen if the market went down and interest rates went up.
For a lot of potential buyers, simply sitting down with them and going over the market conditions, concerns about a potential bubble, interest rates and other factors that affect their upfront costs, monthly payments and total purchase price.
Regulate expectations and emotions
One thing agents can do to help buyers curb the emotion is heavily frontload the conversation. It’s up to real estate professionals to guide buyers through the process from a purely objective and logical standpoint—remaining emotionless as they work through the process.
Another way is to revisit reluctant buyers’ expectations and needs/wants a few weeks into the representation agreement. When buyers start the process, they’re set on finding their dream home. That’s not impossible in today’s market, but many, especially those who need to buy/sell in a hurry, might find it’s quite different than they thought. It’s really important to circle back and re-establish the ground rules for engagement:
- Have they reconsidered geographic areas?
- Have they reconsidered the style of home?
- Have they changed price points?
Ryan Serhant: push, pull, persist
Wishy-washy or reluctant buyers are frustrating to agents, said 2021 Modern Real Estate Summit keynote speaker Ryan Serhant, founder and principal broker at SERHANT. He spoke about his “three Ps” that are his “secret sauce to getting buyers off the fence, getting rid of that indecision and bringing a deal over the finish line.”
Here’s how Serhant described his three Ps at the summit:
PUSH: Sometimes people just need to be pushed in the right direction. People like being told what to do. That’s a real thing. It’s why so many people get into the sales business and then quit. It’s not just the rejection. It’s because for all we complain, we want to be told where to be and what to do.
That’s where real estate agents come in. Agents need to be confident in pushing reluctant buyers toward a decision instead of letting clients make that decision. Say to them: “Listen, these five houses are going to sell, they’re going to go. I know it’s tough, but you like all of them. So which one do you want to make an offer on first? Which one do you want to go to battle for? Let’s do that now. And let’s see what we can make happen.”
You’re helping them get to that decision. You’re pushing them. Serhant said he learned this when from a client who was looking for the perfect home. He spent months showing her everywhere because he thought, “Hey, the client’s always right. I will do whatever she says; whatever my clients want.” That’s not how it works.
Eventually, Serhant listened to what she was saying, and found her a place that was exactly what she wanted. I pushed her to make a decision and she bought it.
PULL: This is the opposite. Instead of pushing reluctant buyers toward making a decision, sometimes some people need to know that the decision isn’t even possible anymore. “Hey, you know that apartment you really really want? That house you’ve been debating about coming up in price to get? Guess what. I don’t think it’s going to be available anymore after tomorrow. So I prepared three more listings for you. They’re not in the area you want to be and they’re a lot less expensive because they don’t have the bedroom count you want but they’re what’s available right now. And I think we should go see them tomorrow at four or five.”
Start to pull the deal away. Pull the dream away. “No, no, sorry. Sorry. I’ve just been in my own head. Where should we come in on price? Let’s do it.”
PERSIST: Serhant said that if he has a client who is sitting on the fence, a client who is completely indecisive after he’s pushed and pulled, Serhant said he goes into “persist” mode by talking to them once a day, and sending them a comp one day with a note: “Hey, here’s something else that just sold. It might help you make a decision.” If they don’t reply the next day, “Hey, here are a few other options.” Next day, “Hey, here’s some market data.” Next day, “Hey, you want to give them a call?” Then I give them two days break. But he persists all the way through, because instead of just pushing or pulling, sometimes clients just need that nudge so you stay top of mind.
Remember, the deal is the most important thing to us because it’s what we do, Serhant said. But reluctant clients have other things on their mind. The push, pull, persist method can help agents close more deals and be more successful at convincing reluctant buyers to commit.
