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There is no question, the overwhelming consensus is home prices affect purchasing power more than interest rates.
The problem is it isn’t true.If you’re a REALTORS® it’s no doubt you’ve asked this question before:
How much are you pre-appoved for?
The issue is that this question is fundamentally flawed because the emphasis s placed solely on the loan amount, not the rate. Don’t blame yourself if you’re in this boat, its been an issue for some time.
What Impact Does The Interest Rate Have
Over at one of our favorite mortgage blogs, Dan Green goes in-depth on this, but the short answer is interest rates have a huge impact on purchasing power.
As interest rates rise, which they’re going to do eventually, every 1% they rise your client loses 10.75% of their purchasing power. Let’s go over that again:
1% rate change = 10.75% change in the amount of home they can afford
Although, the math does work in reverse, we don’t see rates tracking down that much further. So that is why now is the time to buy.
Time For Math Class
A step-by-step run down of how this is going to affect you when rates turn goes like this:
Buyer contacts you looking for a home. You tell them to get pre-approved.
Buyer gets pre-approved for $600,000.
In the time it took y’all to find the Buyer’s dream home, rates rose by 1%.
You send the contract to the lender only to find out the Buyer only qualifies for $535,000 now.
It Doesn’t Matter
This scenario will play out regards of your average price point. It doesn’t matter if you routinely work with buyers in the $400k market or $100k market, the numbers are the same. As rates go up your clients will lose purchasing power.
Educate your prospects and current client that there is no crystal ball to see when rates will turn, but when they do it is going to affect them more than they understand. Be the advocate they need to save money, and get into a home before the market turns.
Next up, If You Don’t A-S-K, You Won’t G-E-T
That statement alone has gotten me so far in life. With all the review sites out there, and with so many wanting to take advantage of video testimonials, some of you have asked how do you get people to do it.
The simple answer is, ASK! But, some of you want a more passive approach, so here you go.
Low-Key Testimonial Requesting 101
What we love to do towards the end of transactions is change-up our email signature. Add a direct URL to a clear call to action for a review or testimonial. If you’re into video include that as well. The drastic change from your normal email correspondence signature will catch their eye and get results.
Also, if you have a monthly e-newsletter add a link there as well. Rotate the link between your chosen sites, like Yelp!, Zillow, Trulia or a landing page made for testimonial submission.
Lastly, take advantage of Linkedin’s recommendation service. This will help your exposure on Linkedin, which we’ve found is an outstanding lead generator for us.
Question Of The Day
What helpful techniques have you used to get client testimonials?
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