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Deal Makers - Overcoming Objections

What we are going to go over now is what we call the X-Factor Deals. Our belief is to be a great agent in this industry you have to put the deals together that no one else can. You will never see your full potential and income if you are just an information giver and a greeter. So when someone comes in with a scenario that you can’t figure out how to make it work, check out these below and see if you can make something happen. They are in order of importance and when to try them.


PMI Buyers/Wraps/Rate Buydown

You must understand financing to make some X-Factor deals. If you know your stuff on the numbers side of the transaction, you will be light years ahead of most new home agents in your area. Refer back to Overcoming Objections #1. Remember, you can buy out PMI by raising the price or wrapping it into the interest rate. When you wrap it into the rate, you will raise the payment a small amount with the rate change but reduce by much more with the elimination of PMI. We can go over some examples of that. Great way to make a deal on a bigger house for the same payment.

Staged Earnest Money

I don’t have all the down payment to start a build. So 5% down of $300,0000 is $15,000. They only have $5,000 but have about $1500 per month they can put down. So, stage the earnest money out until they reach their down payment amount. It's a great program for those who think they need to save for 6 months. Make sure they understand what it costs to wait 6 months. See Overcoming Objections #2 Option #3.

50% Up Front Commissions

This would be if you run into a coop agent and you figure out that they may be pushing a resale home because of a quicker payday. As long as we have enough earnest money down, Summit may approve an upfront commission paid upon writing of the contract and a solid commitment letter. We say 50%, but it could be more with the right earnest money down in extreme cases.

 

Overcoming Objections:

Let’s go over a few objections and how to handle them

Objection #1: I can’t afford it. It’s too expensive, and it’s out of our price range. This is probably the most common objection you will run across so make sure you understand how to overcome this one more than any other.

Let’s say you are sitting in a house that a prospect loves, and it is $300,000. They love it, but they say they are really maxed at $275,000. They say they even started at 250k max but have moved up, and truly, 275k is the absolute max. This initially would seem like a deal that couldn’t be made right?

Wrong: let’s try everything we can. First, when someone sets an amount like 275k as their max,

we run that payment for them.

NHA: Okay, so your max is 275k. Let’s look at how that breaks down. How much will you be putting up as a down payment.

P: We will be putting down 5%

NHA: okay I have your payment on 275k at 4.5% is $1981. P&I $1324, Insurance $125, MI 165. This payment would be your absolute max correct?

P: That’s correct; I’m not spending a dime more than that.

NHA: So let me explain mortgage insurance. This is a charge that the banks charge when you don’t have 20% down. As you can see, you will be paying $165 per month for now. Now, there are options to help with this charge. More banks charge 1.5% or so, and you can buy this out or basically prepay mortgage insurance. Knowing this, let's look at the house that you love for $300k. P&I $1444 Taxes $400 Insurance $125 MI 0$ = $1969

Wait, so if I can make the home you both fell in love with actually cost $12 less a month than what your max payment was when you walked thru the door, when would you like to move in?

P: Are you serious? Is this legal? That’s amazing. Are you sure about this?

 

You will hear all types of comments once you show them this scenario. We will have more info on PMI rates with our preferred lender so you can figure this out closely. We have to remember to talk to the client about different MI rates based on credit scores and DTI ratios. What we are providing is just an estimate.

 

Objection #2: I have to sell my house before I can buy

This might also be the #1 obstacle to overcome along with price. First, ask them all the pertinent information:

  • Where is your house located-address?
  • How long have you lived there?
  • Do you know what the houses like yours are going for in your neighborhood?
  • Do you feel like you have good equity in your house? Getting what they owe?
  • Any updated you have done or that were in the house when you purchased?
  • Details, beds/baths/garages/finished basement/fence/roof (shake)/ age.

Option #1: Talk to them about getting approved prior to selling. They can look at options such as a bridge or swing loans. Talk with our preferred lender on some plans to help them be able to swing both houses for a while if needed.

Option #2: If they are in a good neighborhood, show them some comps just like their home, and how fast they move and at what prices.

Option #3: Also make sure that you run a scenario with them on what can happen if they wait

  • Now $300,000 home at 4.5% = $1520 P&I
  • In 6 months, $300,000 home at %5 = $1610
  • $90 a month = $280,000 instead of $300,000 purchasing power

So, waiting 6 months, if rates only go up to 5%, the buyer can only buy a house for 280K vs. 300k for the same payment. A loss of 20,000 in purchasing power. This is big!! Buy now!! What if rates go up 1%-show them. What if our base pricing

 

 

Objection #3: Job transfer not done yet or they are interviewing for a job here and they won’t know for 2 weeks.

This is a pretty easy scenario. If they want to wait until they are certain they are going to get a job offer here in KC, why not write the contract contingent to just that. Do the deal with a stipulation that they get the job offer in that time frame.

Objection #4: Wrong school district

Again, pretty easy scenario. You know the districts well and where Summit builds. Send them to the representative in the community that fits their needs on schools. We will all be doing the same thing so you get payback when someone needs to be in your district.

Objection #5: Lease isn’t up for one year

Option 1: Let's do a delayed build job. Example it’s Jan 1st and lease is up June. We do just over a 6 month build job. Projected closing date is June 15. Be sure and explain how this helps them. If they close on the 15th of June, they don’t have a payment for all of June. So they don’t even have double payment for even one month.

Option 2: Talk with Summit and if they would like to close sooner, they might close one or two months sooner and pay for the remainder of the lease. This would be a scenario to run by Summit.

Option #3: They are on an inventory home, check with them on what it takes to break their lease. If it is 2 month's rent, Summit might be interested in doing this to move a certain inventory home.

Remember on these the best way to physically give the buyer money is to pay closing costs or do upgrades on the new home. So if the lease buyout was $2000 we pay $2000 of closing costs and that leaves them that money to buy out their lease.