Jason Forrest is a sales trainer, management coach, member of the National Speakers Association’s Million Dollar Speakers Group, and author of three books, including his latest, Leadership Sales Coaching. Learn more at www.fpg.com.
Rising Interest Rates: Keep Calm and Prep On
It's only natural that buyers and sales associates will get nervous about increasing interest rates. Here's how to keep deals on track.
July 18, 2013
Rising interest rates matter in home sales. Even half a point can dramatically affect affordability on any big-ticket purchase. So, it’s inevitable that buyers get nervous about an increase in interest rates. They’re realizing that their payments will be higher on the home they want. Or they’re thinking they are going to have to compromise on their desires in order to stay within their price range.
When this happens, you may have some nervous agents on your team. Stay calm. Your team members will be looking to the seasoned veterans and leaders such as yourself for clues on how to feel about the situation. As a broker, you can provide certainty to jittery agents only if you are confident.
What you, as a broker, need in this situation is what I like to call the “X-Factor agent.” X-Factor agents love a challenge. To them, it’s like the next level of a video game—something that keeps them stimulated and on their toes. X-Factors don’t panic with rising interest rates. Instead, they provide certainty for their clients and lead buyers to focus on the deeper reasons behind their purchase.
Whether you’re working with buyers or your team members, prepare for the uncomfortable conversations by remembering that rising interest rates are a sign of a strengthening economy. When the economy is doing poorly, people tend not to buy, demand decreases, and interest rates go down. Bringing up this point allows buyers to think differently. Rather than being stuck on the fact that their payment will be higher, they can think about the fact that they are buying at a more stable time.
Another way to prepare for the inevitable interest rate conversation is to have a solid understanding of how much various changes will affect actual payments. You should be able to tell buyers how much a one-point increase will affect their purchase. You have to know the rough numbers and be able to talk them through how that translates to their daily lives. Remember that you are the primary source of confidence, hope, and certainty for your buyers. So, do the research and preparation necessary in order to calm jittery buyers (and sales associates).
One of the most powerful tools in any sales professional’s tool belt is an understanding of each prospect’s and buyer’s “whys.” Their whys are every reason that a new home will improve their lives. You find their whys by digging deep and understanding what motivates your buyer. Do they need a home to give their kids their own rooms (and therefore bring more sanity to their household and harmony in their marriage)? Do they want to stop renting so that they can build their wealth and therefore feel more secure? It never stops at the first reason they give for wanting to buy. You have to dig. Understand why each customer needs a new home to improve their life. That way, when they start focusing on the circumstances (and all the potential consequences) of buying, you can bring them back to the reasons they sought you out in the first place. Then you can convince them to consider the consequences of not buying.
As X-Factors, times like these are where these agents prove their worth — and where you lead your team and your buyers to see things differently, so they can feel confident about their career path or purchase. Stay calm, educated, and prepared to help walk jittery buyers to the finish line.