Easy methods to cope with homebuyer fears in an overheated market
I recently called her after a buyer showed one of our listings to one of our listings. It turned out that the buyers loved the house and considered writing an offer.
“However, they are scared and may not actually write,” her agent explained.
I asked the obvious question, “What kind of fear would keep you from writing an offer?”
The answer bothered me. “You are concerned that the price may be way above the asking price and are therefore afraid to write.”
In my world, fear usually arises from the possibility of possible harm or harm. The thought of being alone with a Leo, as you may be injured or even dead, could be a legitimate fear. On the other hand, what potential harm could arise from writing an offer that does not effectively compete with other offers?
There is no end to valid potential homebuyer fears. Some are obvious:
- “What if I later lose my job?”
- “What if either of us gets sick?”
- “What if we discover something terrible about our house after we move in?”
- “What if the market collapses and my house loses a significant portion of its value?”
- “What if I find that I don’t like my home or my neighborhood?”
- “What if a sexual predator moves in next door?”
- “What if a natural disaster damages my property?”
Like it or not, life is all about risk. Whether you’re asking someone on that first date, visiting a new restaurant, or investing in the stock market, there is an end to uncertainty in almost every facet of our lives. This saying is true: no risk, no reward.
This also applies to working with buyers, especially in a volatile market like the one we are in. The key is to help buyers identify valid risks and then work with them to overcome their fear by providing appropriate answers.
First you need to find out if the fear is valid. While every fear has a basis, some are more valid than others. When you hear words related to fear (“fear”, “worried”, “fearful”, “worried”, “fear”, “concern”), try to find out what is beneath the fear itself.
Using the example of “fear of writing an offer”, if a buyer believes that he has no reasonable chance of winning in a certain offer scenario, he may fear that he is wasting the time of the seller or his agent. On the other hand, if they think they might have more to bid for a property than they do can afford, that’s not fear: it’s common sense.
Instead of letting “fear” prevent your buyers from writing a proposal, coach them into writing a proposal that is within their financial parameters. If your efforts are inadequate, no harm, no foul. Go on.
While no sellers like to receive lowball offers or those with ridiculous terms, the only bad offer is the one that is not posted. Of course, balance and common sense are required, but never make assumptions when writing offers. The offer with the highest price is not always the winner. Cash doesn’t always triumph. Sellers don’t always pick the obvious winner. And so on.
We encourage our buyers to attribute spaghetti theory when writing offers: “If you throw enough spaghetti on the wall, something will stick.”
Hopefully every time you write an offer but don’t sign a contract, you use the knowledge you have gained to improve your future offers. It goes without saying that if a buyer continues to lose in making offers, they will need to change their parameters to put themselves in a category where they are more likely to win.
The truth is, if your buyer has legitimate concerns about writing sales, it is probably best they stop the home viewing until their concerns are resolved. If they visit a house they love but are reluctant to write an offer for fear, sit down with them before showing them another property to find out where the fear really originated.
Make searches. Once you discover the real fear beneath their actions, coach them forward. Here are the top four buyer fears and how to reduce them:
1. Fear of buying the wrong home
With the pressures of a critical shortage of available homes and the resulting multiple offers for everything decent, many buyers are concerned that decisions made in such a competitive and emotional environment could result in the buyer’s remorse . This is especially true for first-time buyers who are using it for the first time.
While they may end up in a home that either doesn’t meet all of their stated needs or is less than hoped for, first-time buyers need to understand that, in most cases, their first home is a stepping stone to the home of their dreams. In other words, very rarely is their first home their “forever” home.
With that in mind, finding a home is more important than finding one that ticks all the boxes. Buyers approaching the current market with an immutable list will be the ones sitting on the sidelines as others move into their new homes.
Due diligence is appropriate: do any proper inspections, review the house, and set rational boundaries. For example, a family of six shouldn’t buy a two-bedroom apartment.
As you coach, help them understand that they may need to be flexible about other parameters, such as: B. Square footage, number of bedrooms or bathrooms, local schools, and even the city.
Train them to realize that while criteria are important, securing a home in the current area is vital. Even if the home is not ideal, most buyers can live in sub-ideal conditions for a few years before advancement is possible.
2. Fear of financial loss
It is reasonable to expect that buyers who are already reaching their external borders will be concerned about financial losses. As far as I have seen, the main concern in an escalating market is the fear of a possible drop in prices.
“Why buy now when my home is going to depreciate in the near future?” They ask. The underlying problem here is that you view your primary home as an investment rather than a place to live.
When you buy an investment, you want it to do well. When you buy a roof over your head, it doesn’t matter what happens to the value: the key is whether you can keep making the payments.
Those who bought homes at the top of the market in 2005-2006 were appalled when the market later collapsed and their values fell. Homeowners who were stuck and continued to make their monthly payments are now sitting in homes that are worth more than they were at the previous peak.
Real estate is cyclical and what goes down will eventually go up again. Even if a home’s value falls after it is bought, as long as buyers pay the mortgage, they can still enjoy the benefits of home ownership, including the associated tax benefits.
Train your buyers to understand that it is more important to focus on their ability to make a monthly payment and take full advantage of home ownership than worrying about short-term fluctuations in market values.
3. Fear of environmental damage
When we live in San Francisco Bay, we often hear comments from people across the country questioning our sanity for living in a seismic area. I have the same concerns about people who live in areas affected by potential floods, tornadoes, hurricanes, forest fires, and the like.
Regardless of where you live, there is a risk of damage. Ironically, a recent survey found that only about 10 percent of Californians have earthquake insurance.
Other forms of damage can come from a variety of sources, be it house fires, break-ins or other uncontrollable events. Train nervous buyers by explaining the protection options available.
4. Fear of personal harm
One of the fear-inducing questions that plague buyers is the potential for job loss, illness, or even death. Again, there are safeguards for different types of insurance. Train them to weigh all of their options so that they understand what might be best for them. Ironically, I’m amazed at the number of buyers who don’t have personal insurance.
Life is full of risks. Those who manage to achieve their goals are the ones who accept that risk leads the way to success and still choose to go the way. You might fall off track on occasion, but in the end, the benefits of owning property far outweigh the risks.
Carl Medford is the CEO of The Medford team.