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Buyers Scared of Market Minefield

Feb 27, 2008
With all the talk in the news lately about the housing market falling apart, buyers are getting more and more fearful every day. A good real estate agent must know how to set their minds at ease in this minefield of a market.

Buyers are watching carefully as builders relentlessly slash the prices of new homes and they are constantly second-guessing themselves. What is the main question on their minds? The doubt that keeps most of them up at night is whether or not they are timing their purchase right. They know that they have the desire to buy and today's buyer usually has the means to act on what they want. They are just not sure that now is the time to move forward because they are being bombarded with the message that housing prices are about to drop even more.

Put yourself in their position. If you were about to buy a $30,000 BMW that you have heard will be on sale in a month for $20,000, what would you do? If you had the ability to wait it out, even if the chances of keeping a substantial amount of your cash were slim, you'd likely wait it out and see. It is the same story with potential home buyers. They may not intend to wait a specific amount of time, but they certainly don't want to close a deal on the same day the man on the morning news is screaming, "Don't buy a house now, whatever you do!" Jim Crammer, of CNBC, is even telling homeowners in upside down mortgages to, "just walk away," from their homes in that situation as an option to get out from under them. It tends to make people a little gun shy when they hear that kind of talk.

Some buyers are even demanding huge gouges out of the final price of homes at the last minute. Usually after the home inspection, buyers sense that the sellers are overwhelmingly relieved to finally be selling their property. So, buyers throw down a list of demands that reads more like a ransom note just before the closing. Sometimes they even panic and pull the plug on the deal entirely.

So, what's an agent to do with all of the market's squirrelly buyers? You need to vaccinate them against buyer's remorse before the evil virus takes hold and kills your deal. Bring them back to the basics. Remind them that even though the market may have its ups and downs, homes are a great thing to buy. Over the long haul, real estate is a terrific investment. What other material purchase will gain equity while they use it day in and day out?

Also remind them that a small drop in the price of a house will likely be offset by a rise in interest rates. Unless they are prepared to pay cash up front, they need to factor in more than just the purchase price of the home. A realtor may even want to consider pricing their properties aggressively low to encourage multiple bids. Force the buyers to set the price. A little competition always makes a property appear more enticing to a prospective buyer. So, in today's market, a little advice will go a long way when you're talking to prospective buyers. Agents, like buyers, must commit to staying the course as we watch the housing market continue to morph.
About the Author
Tim Harris is a co-founder and head coach of Harris Real Estate University. After a long and successful career of selling thousands of homes, he sold his real estate business and started HREU. Since 1997, Harris Real Estate University has thousands of Realtor-Students participating in education courses on a daily basis.
Read more in Tim's blog.
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