Mortgage rates have remained consistently low ever since the housing crash caused a worldwide economic crisis. After years of record-low rates, it’s easy to think it’ll always be this way.
But it won’t. We don’t know when, but since change is the only thing constant in life, we can count on rates rising. December 2015 marked a small, but potentially significant shift, when the Federal Reserve raised short-term interest rates (its first baby step since 2008’s financial crisis). While the Fed’s action doesn’t directly affect rates on long-term loans such as mortgages and auto financing, most experts believe those rates will soon climb, too.
Along with a host of other reasons, that means now is a great time to buy a home. Of course, the first step to selling a home is matching prospects’ needs with the right property. After that, circumstantial urgency (such as rising interest rates) can be a tool to move the process forward.
The current economic climate naturally lends an element of circumstantial urgency to the home buying market. As a broker, your job is to teach your sales professionals to use this simple and timely message to move buyers forward in the process and close the deal. The larger lesson can last a lifetime, if you can coach your sales team to make the most of such times whenever they present themselves. Instruct them to approach prospects with circumstantial urgency in different ways, depending upon where they are in the purchase process, to move people closer to their goal of buying a new home.
- Your agents should discuss the changing conditions as their intro when following up with buyers who have everything in order and are close to closing a deal but lack urgency. They’re the ones who can definitely move forward but are comfortable enough in their current situation not to. Now is the perfect time to be proactive in approaching such buyers.
- For people just starting their search and expressing interest in buying a home “at some point,” agents should ask when they can help them start the search. Looming mortgage rate increases are a tool agents can use to convince those who want to buy a home in a year that they would be better served by making their move sooner.
- For buyers who have been in the process for a while but are stalled or procrastinating, the circumstantial urgency to move forward before rates go up can nudge them toward making their decision.
Of course, the Fed’s decision to increase interest rates is only one of many conditions that can instill circumstantial urgency in the home buying process. For instance, if a buyer is considering the last home in a community, or if a builder they like is offering a limited-time sale, or if a government tax credit for first-time home owners is about to expire, your agents have a powerful tool they can use to close the deal.
But let’s revisit the very first step in the process: finding the right home for the buyer. Buyers can quickly sniff out a sales pro who is insincere or dishonest and who pushes for a decision without bothering to understand what will improve their lives. Likewise, buyers sense that agents care when they go beyond the “what” questions (What size kitchen? What price range?) to the “why” questions (Why is that fourth bedroom important to you? Why is the current setup, with the kids sharing a room, not working for you?). Buying a home is an emotional decision, and there’s no shortcut to asking the right questions and engaging buyers in conversations that will lead to getting them in the right home.
This makes the very act of teaching circumstantial urgency a secret evaluation tool for you as a broker. Capitalizing on circumstantial urgency will help your agents close sales, but it will not do their work for them. If the sales professionals you lead are completely dependent on circumstances to sell homes, they won’t last. The agents you want to attract and retain will understand how to use the conditions when they’re right, but know that they won’t always be right.
Coach your team to use marketwide circumstances as a supplement to their sales process rather than a shortcut. If they get to know buyers well enough and really dig into what home features solve the problem that caused them to start looking in the first place, agents will win sales whether the conditions are “right” or not.