Coaching Your Buyers When They Don’t Want to Overpay
Powerfact: When it comes to coaching your clients in the buying process, we, as real estate agents, need to shift our buyers away from the idea of timing the market, because there is no predicting what’s going to happen.
By Real Estate Coach and Speaker Darryl Davis, CSP
The market is a little crazy these days, and the competition for a home is fierce! Coaching buyers in a seller’s market can be stressful! Not only does a buyer have to contend with multiple offers, but most of these offers are well above asking price. It’s only natural for buyers to be concerned about paying more than what the house is worth.
Your Buyer’s Reason to Buy
Most buyers aren’t buying a home as an investment unless they are buying rental properties or a home to flip. If they are, then any mathematician can do the calculations to tell them if a house is a good deal or not.
However, if they are buying a home, they shouldn’t try to gauge whether they are overpaying or underpaying, because it’s not about timing the market. It’s about buying a place to create memories and experiences, and having a place to put their head at night. Unless people are investors, they buy houses, they buy homes.
Coaching the Buyers About Their Commitment
With that reason for buying, we need to coach buyers not to look at this as an investment per se, and to stop thinking about whether they are over or underpaying.
We need to ask them:
“Why are you buying a house? What’s your commitment in buying this home? Why is this important to you right now?”
They will answer with their reasons, for example:
“We have a baby on the way, we want to move into a better school district, we want to be close to my elderly parents,” etc.
These are the reasons to focus on.
Real Estate Is Better Than the Stock Market
Warren Buffet said once that if you purchase real estate at low interest rates, and over a long term, real estate is better than the stock market.
We have seen real estate go up, and we’ve seen it go back down. We’ve seen bubbles, and we’ve seen bubbles burst, like it did years ago when all the property values dropped. But, if your buyers are looking at buying a house today with the intention of being in it for 5, 10, or 15 years, then they are going to win, no matter what.
Even if it goes down a little bit over the long term, like MarketWatch suggests in this article, it will recover and go back up again. Your buyers aren’t buying stock, and this isn’t day-trading where you can make or lose a million dollars with each purchase.
Your buyers are buying a home to create memories in, to go home to every night after work, to raise their family — those are the reasons we should be focusing on right now.
If buying to build a life isn’t important to your buyers right now, then they shouldn’t buy a house.
You Can’t Time the Market
When it comes to coaching your clients, we, as real estate agents, need to shift our buyers away from the idea of timing the market, because there is no predicting what’s going to happen.
I’m going to play devil’s advocate here in a conversation with a buyer:
“What if you decide that you don’t want to overpay, so you’re going to wait until the prices come down. But, what if, next year, the prices go up even more than what they are today? What do you do then? Are you still going to wait to pull that trigger? What if you can’t keep waiting and now you have to pay 10% more? Are you going to wait two, three, maybe four years in the hopes the prices drop? If you knew what was going to happen, you wouldn’t need me because you would be sitting on some mountaintop, telling people what to buy and what not to buy, and you would be a multi-millionaire monk! The truth is, I live and breath real estate, and I’m licensed by the state and supposedly I should know more than you, and I can’t even tell you what’s going to happen next month, or next year, so all we can do is buy today, based on what’s important to us today. If it’s important for you to buy a new home for you and your family, then buy, and if it isn’t, then absolutely you should not buy now.”
You can only do the best you can do with the information you have at the time. Coaching your buyers who are concerned about overpaying means presenting the options of buying now versus waiting and helping them remember what they are committed to.
What Comes Next?
Are you ready to start taking things to the Next Level®? Coaching your buyers as they make decisions regarding whether or not to buy in this market means you need to help them define their commitment and focus on today.
Power Agents®, you’ll find lots of tools to develop your skills and help you grow in courage and knowledge to better serve your clients in the Buyers section of the Classroom. Whether you need to coach them through a difficult decision, help them in a multiple offer scenario, or give them confidence in their decisions, you will find it there! Be sure to download the beautiful new Buyer’s Guide to Real Estate!
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