Dealing with changing market conditions is an ongoing part of the job for sales agents and in the current market buyer confidence is cooling and objections are starting to rise.
Top real estate coach Claudio Encina says dealing with buyer objections can be tricky after a period where sellers have held the upper hand for the past few years.
“We’re seeing buyers become fussier and increasing their perception of value for what they want to spend,” Claudio says.
“They want a whole lot more for their dollar now when they used to be prepared to compromise.”
With buyers being more circumspect and aware of the changing market conditions, sales agents may be faced with more buyers starting to get cold feet.
But Claudio says the most common objections are rational and can be negated with some key expertise.
Here are five buyer objections and how to deal with them.
Interest rates are going to rise
With the RBA officially raising the cash rate, some buyers are concerned about the impact of high mortgage repayments.
Claudio says it’s important to point out that while rates are predicted to rise, we’re still in the lowest interest rate environment in history.
“Rates are presently 0.35 per cent, which is still very cheap,” he says.
“As a buyer, your borrowing capacity is still strong, versus, if you wait six to 12 months, you’re borrowing capacity will be restricted.
“You can still find a three-year fixed loan for under 3 per cent, so while interest rates will go up, you might as well go in while your borrowing capacity is strong.”
Prices are going to fall
After a record surge in house prices, many buyers now think they should wait for property prices to fall.
Claudio says it’s important to clarify with buyers how long they plan to live in the property.
“Most people in suburbia usually plan to live in one house for seven to 10 years, so it’s worth showing a buyer the price history of a suburb over time,” he explains.
“Facts and evidence can tell us a lot and tell us whether we’re buying a good solid investment or whether prices will retreat.”
It’s also important to ask a buyer what the risk of waiting might be.
“You’re going into a rising interest rate cycle, your borrowing capacity will be reduced, credit will be harder to obtain, and valuers will be far more conservative so your finances might not be improved,” Claudio says.
“So we can wait to see if prices come back, but what’s the ultimate risk.”
I’m going to make a lowball offer
In the face of low offers, Claudio says it’s important to remember the sales agent’s job is to protect the vendor.
“Unless you thought it was a fair offer, you’d open the dialogue around the offer and suggest to the buyer that you appreciate your offer, but you’ve already tested that level and ask them what their next best offer would be and how close they can come to the guide price,” he says.
“Shut it down quickly and try and get them up.”
I’m just going to rent for now
While renting might be fine for some people, if buyers are ultimately looking to own a home, Claudio says it’s worth weighing up the cost of the “dead money” being put into a rental.
“Being in the rental market, for the same amount of money you’re paying in rent, you could be paying a mortgage and owning a home instead of paying the home off for someone else,” he says.
“It’s about money that’s not appreciating versus money that can appreciate.”
House prices are too expensive
Claudio says if buyers can’t afford to buy in their dream location they should use the current market to get into a property they can afford.
“If it’s a little bit out of their budget encourage them to look at alternatives,” he says.
“Maybe one or two suburbs away the median house price is a little bit more affordable compared to their ideal location.
“It’s about what they can get into now so they can grow some equity and then that will be the stepping stone to the dream suburb.”