How to Handle Buyers From Backing Away

As interest rates rise, there are a lot of buyers that are backing out of the market for a variety of reasons. Adding to this, the stock marketing continues to decline, creating more difficulty for some buyers. Because of this, more buyers are starting to wait and see what is going to happen. Some buyers are waiting to see if house prices begin to drop in response to the interest rates increasing, and others are waiting to see if they can land bargains from sellers that have homes on the market longer than anticipated.

The best way to handle this shift in the market is to understand the market and to be able to respond with confidence.

For the buyers that are going to wait for interest rates to go back down, the best way is to discuss how the interest rates got to that point to start with. Due to the crash in the economy in the mid-2000’s, the Fed attempted to revitalize it by dropping interest rates. They dropped it again due to the pandemic. In 2020, there was a small increase to an average rate of 3.11 percent. As the economy normalizes, rates will continue to rise back to what would be a historical average. So those waiting for interest rates to lower again, may be waiting for a long time. Currently, the Fed is raising rates to slow down the economy. If your buyer is on the fence, you should advise them to lock in a rate now as they are continuing to rise.

For the buyer who is waiting for prices to come down, you may want to let them know that the decline may not be significant enough to make up for the interest rate increase. Explain that the purchase price does not matter if the buyer’s strategy is to stay in the home for any length of time

. As long as the buyer intends to hold onto the property, history has demonstrated that homeowners typically come out ahead.

For the buyer that wants to send out a lot of “lowball offers”, explain to them in the current market, the seller will likely just wait a bit longer for a better offer.

For the buyer that will continue to rent, show them how it it is in their best interest to consider purchasing. Rent has been steadily increasing and as your rent increases, your personal wealth decreases. It would be in their better interest to get into a house with a steady mortgage payment, than continue to watch rent prices continue to increase.

For the buyer that feels like they can’t afford the house they want, just explain to them that they need to get into the real estate market and then move toward their dream home. It is in their best financial decision to get into a house rather than wait.

There are a lot of excuses to walk away from purchasing a home, but there are more reasons for them to make the move. Their financial security and building their personal wealth and security being the most important. It is your job as an advisor to explain this to them and show them how it can improve their situation.