How Do You Move Buyers AND Sellers Off the Fence?

The key to marketing is not so much the how as it is the how often.  The problem though is content: what are you bringing of value each time you touch your client?  We currently have a tremendous opportunity.  The recent rate drops by the Fed have been severe and there are a number of possible outcomes.  I have discussed them before and Option 3 was more fully explored by Dan Green.  But they can be a great source for marketing material that raises your perceived expertise.  More importantly, this information can be used to move buyers AND sellers off the fence.  How is that possible?  Follow the bouncing ball of fiduciary obligation:

Outcome 1: The cost of money drops enough to bring buyers back to the table.  This leads to a window of relative parity in supply and demand.  BENEFIT: both buyer and seller benefit by acting now. 

Outcome 2: People view the rate drop as confirmation that economic problems are worse than originally imagined and pull back.  This decreases demand over time and housing prices continue to fall.  BENEFIT: seller benefits by acting now.

Outcome 3: Rate drop could be too much, setting off an inflationary cycle that the Fed has dreaded for some time.  Affordability drops over time due to the higher cost of money.  BENEFIT: buyer benefits by acting now.

As you can see, each option lends itself to someone acting immediately and here is the key point: we do not have a crystal ball.  The market is going to move (it always does) and it is going to benefit one group over another.  We might hope it moves in a specific way.  We might even expect it to move in a specific way.  But we do not know.  It is this acknowledgement that gives us the edge in helping both our buyers and our sellers act now.

An agent’s fiduciary obligation is to look out for their client’s best interest.  It should go without saying that all options be explained.  But when discussing a clients’ home, their best interest is usually aligned with their safest one and that means minimizing risk is more important than maximizing reward.  Now look at the following two conversations:

Conversation with seller: “Mr. and Mrs. Seller, after reviewing these outcomes, I believe we should focus on #2 and act now.  If we are wrong, the downside is you sold for less than you might have had we waited.  But if we are right and do not act, you may not sell your house at all.  By comparison, the latter is far worse to your financial position.”

Conversation with buyer: “Mr. and Mrs. Buyer, after reviewing these outcomes, I believe we should focus on #3 and act now.  If we are wrong, the downside is you paid a little more for your dream home than you might have had we waited.  But if we are right and do not act, you may never get into your home.  By comparison, the latter is far worse to your financial position.”

Now the clients are impressed with your expertise (which leads to referrals); of much greater importance, however, you looked out for the best interests of both your buyers and your sellers.  Icing on the cake: you are moving twice as many clients off the fence and into action.

Filed under: LIFE THAT POPs, REALTORS , Fed, inflation, REALTORS, recession, Success

Read about the Fed in the Shower

The Fed went ahead and lowered the overnight rate another half point today.  Hard to imagine this being a good move in the long run.  I commented last week about the possible inflationary pressures of this decision and I was going to comment again today regarding their decision.  But there is no need when you can read Dan Green over at Mortgage Reports summarize this so succinctly.  Once you visualize The Fool in the Shower, it is all very clear.

 After you read this one start talking to your clients.  The more info you as Realtors can bring to the table the more expertise you are seen to have and the more referrals you will gather.  Buyers sitting on the sidelines need to take a good long look at what rates are going to do if (when) Dan is right.

Filed under: LENDERS, POLITICAL & ECONOMIC FOLLY, REALTORS , Fed, inflation, recession

The Good, The Bad and The Fed

The Fed has done it again.  Known for over reacting to economic stimuli, the Fed announced today a surprise, 3/4% cut to the overnight rate as well as the discount rate.  Cause for celebration, right?  Maybe not.  Here are three of the possible ways that this plays out:

The Good: people take advantage of cheap money and reinvest in their business, which slowly begins to bring the recessionary ship around.  Of course, in this era of historically low unemployment and historically high energy prices, that could lead to the inflation monster the Fed has been (correctly) tracking for some time. 

The Bad: this move is seen as confirmation that there really is a problem and that it is severe, thus causing businesses and homeowners alike to pull in and tighten up.  In the short time since this was announced I have spoken with about a dozen people and the recurring theme seems to be: “Wow, I knew things were bad but I did not know they were this bad.”  Does that sound like the voice of salvation?

The Ugly: Imagine the Fed as a hired gunslinger being paid to protect our town (the economy).  They carry a six-shooter armed with the ability to lower the cost of money and they rarely have access to a reload.  By shooting this many bullets at once they risk being defenseless when a real bad man shows up.  By “real” bad man I mean the upcoming Neg-Am debacle, which is going to make the sub-prime crisis look like the small ripple it really was.  Tough to defend a town with no bullets and if the Fed Funds get below 2%, they are basically throwing their empty gun at the bad guy.  It may look good in the movies… it may even feel good… but you are a goner just the same.

Filed under: BUYERS, LENDERS, POLITICAL & ECONOMIC FOLLY, REALTORS, SELLERS , Fed, inflation, recession