The #1 Message Prospects Need to Hear When New Home Prices Rise Sharply
One of the biggest challenges in new home sales today is overcoming buyer price resistance.
With the popular press spewing out headlines about homebuyers getting priced out of the market, it’s no wonder they’re worried.
This means your ability to manage price resistance could determine your ultimate success or failure in today’s market.
So how do you and your sales team overcome pricing concerns?
When prospects come to you worried about pricing, the assurance they need to hear from you most can be summed up in a single word: PERSPECTIVE.
The Illusion Of “High Price”
When you step back and look at the big picture, the boogeyman of increased pricing for a new home turns out to be nothing but a mirage.
Allowing it to block your prospects from moving forward could cause them to seriously regret missing out on what will seem like a great deal in hindsight.
In the grand scheme of things — especially in today’s inflationary environment — the price paid today could seem like a pittance tomorrow.
After all, buying (or not buying) a new home is one of the biggest — if not THE biggest — financial decisions that a family, couple or individual will ever make.
Helping them understand the true economics so they can make good choices is where you and your team come in as informed sales professionals.
To help prospective buyers cross that fearful chasm, our job is to enable them to put things in perspective.
Just Another Bubble?
Memories of the 2007-2008 financial meltdown fade slowly.
Your prospects may be thinking, “Gee, this seems a lot like the hot housing market of 2006… What if it all comes crashing down? Wouldn’t it be better to wait?”
It’s a common mistake, especially in financial decisions. An all too human tendency is to “fight the last war”.
So a little “reality therapy” may be needed to help prospects get past this concern. You can simply point to any number of studies showing the current 3-5 million unit backlog in housing today.
In fact, it’s estimated that it could take U.S. homebuilders 5-10 years to catch up with the current shortfall.
And that’s not all…
With Covid restrictions making work-at-home a practical and permanent solution, many families are seeking larger living spaces, driving up demand for new homes typically offering more space…
Millennials starting families are driving up demand…
And a little known factor putting a dent in supply is investor buying.
In early 2012, the U.S. government launched a program allowing private investment funds to easily purchase foreclosed homes around the country by the hundreds from government agency Fannie Mae. Wall Street firms like The Blackstone Group swooped in and have been scooping up homes by the thousands ever since.
All told, what we’re seeing today is no bubble.
Rising prices are simply the result of strong, ongoing demand and limited supply that looks likely to go on for the next 3-5 years at least.
Which means the best advice you can offer prospective new home buyers is, don’t wait or you really could get priced out.
Why Rate Matters
For most new home buyers, the lion’s share of expense for a new home is actually the interest built into their monthly payment — especially in the early years of the mortgage.
When the higher underlying cost of a new home is offset by lower interest rates however, the choice is a no-brainer.
It only makes sense to own a wonderful asset made affordable by lowered payments.
This is especially true when prices in all segments of the economy are going up, reducing the value of every dollar.
A declining value in the dollar (due to inflation) is GREAT news for borrowers — Especially for new homeowners paying off a mortgage, probably their highest household expense.
So the combination of an appreciating asset with a loan that gets easier to pay off every year is a double win for new homeowners!
With The Fed pumping money into the economy and unprecedented fiscal spending winding its way through Congress, it’s not hard to foresee an inflationary environment over the next few years.
Again, the best advice your prospects can hear from you is to “get in while the gettin’s good!”
The Cost of Waiting
An objection we often hear from prospective homebuyers is, “Well, we’d rather wait six or twelve months until we can save another $10k first…”
What they need to hear from you at that point is something like this:
“Okay, so let’s say you wait six months, and the price for the home you’re looking at now jumps another $20k. You really didn’t save anything. In fact, the decision to wait actually COST you twice what you tried to save.”
With production costs, delivery times and interest rates all heading upward, the cost of waiting is REAL.
And that means you’re doing a serious disservice to your prospects if you don’t make sure they’re absolutely 100% clear about the risks they take by waiting.
Expert Training in Objection Handling
Handling price concerns is just one of the many levers in a successful sales professional’s toolkit.
We look forward to helping your team take your company’s sales to a whole new level!