Rates are going up. Here's how you can stay in the game.
October 02 2018
As mortgage rates increase, so does the concern that prospective homebuyers will abandon the housing market. But, those worries may be unfounded. A recent study by Redfin found that only 5 percent of buyers would call off their home search if mortgage rates surpassed 5 percent.
While higher mortgage rates mean higher monthly payments, buyers are determined to keep searching and are willing to make the necessary compromises. As supply continues to trail demand, how can you help your clients to prepare for competition?
Start by setting expectations.
Explain that waiting too long for the perfect home could price them out of the market. Help clients develop a realistic list of must-have features. Determine which features they need immediately and which could easily be installed or upgraded in the future.
Focus on reducing costs.
Discuss how location affects pricing. Expanding the client's search radius could introduce more affordable options.
Qualified buyers may also find relief in FHA loans and other mortgage products with reduced down payment requirements. One such option is Fannie Mae's HomeReady Mortgage, which offers co-borrower flexibility, cancellable mortgage insurance and down payments as low as 3 percent.
Emphasize that time is of the essence.
Clients need to be prepared to move quickly. In a multiple-offer situation, many sellers will prefer the buyer who can close the fastest. And, some lenders will offer lower rates for a 30-day closing versus a 60-day closing. Being ready to move at a moment's notice is often easier said than done, but there are ways to prepare. Renters may be able to arrange a month-to-month lease during their search for added flexibility.
Rising mortgage rates may have upped the ante, but they haven't changed the rules of the game. While every client is different when it comes to budget and mobility, the need for your expert guidance remains the common thread.
Training and coaching are key components of the Keller Williams experience. Our award-winning programs provide agents with education and resources to create a successful real estate practice. Learn more about how we can help you too.