Legendary escape artist Harry Houdini could get out of any jail, handcuffs, or straightjacket he ever tried—that is, all save one. That one place was a little jail in the British Isles.
As the story goes, a crowd watched anxiously as the magician was placed in the small cell. Reporters held stopwatches and spectators held their breath as the cell door was closed. Houdini worked at the lock with terrific speed that usually unlocked doors in thirty seconds, but he could not get the lock to spring.
Thirty minutes passed. Then a full hour. Finally, tired out by his strenuous efforts, Houdini pressed forward against the door—it swung open. It had never been locked.
Many homeowners today feel trapped due to the “lock-in effect.” They’re reluctant to sell because they’ll have to take out a mortgage at a higher rate to buy a new home. Their pandemic-era home loan or refinance has become their ‘Golden Handcuffs.’
However, with the right forward push, doors can open, and clients can slip free to make their next move. Here are two ways lenders and real estate agents can help would-be sellers and buyers feel confident enough to step back into the market.
1. Educate clients and instill confidence
In today’s market, sellers waiting for the market to change, wait-and-see sellers, feel restrained by both sides of the golden handcuffs:
- Worries about selling their current home, particularly timing and the market itself
- Worries about affording a new home
A recent survey of top agents across the country underscores the grip these concerns have on consumers, with 59% of agents reporting an increase in contingencies last year.
Here are the strategies agents said work best in the current market to overcome this buy-sell conundrum and open doors for sellers:
- More than 70% of agents are advising clients to be more willing to negotiate on contingencies and terms, and presenting data to convince sellers to reduce the list price on overpriced homes.
- More than half of all agents are also encouraging sellers to be open to making concessions and offering credits, like offering to pay the buyer’s agent fees and rate buydowns. Agents said the top request made by first-time buyers is a mortgage rate buydown from the seller.
Educating existing homeowners (would-be sellers who’ll need to buy again) should also include exposing the “waiting for low rates” money-saving myth.
History has shown us that low interest rates increase demand, driving up home prices. Buyers used to embrace the motto, “Marry the house, date the rate.” But many of today’s sidelined homeowners have decided to marry the rate, which can result in stalled progress, missed opportunities, and look-back regret.
Educating your customers about these middle-ground strategies can address both timing and affordability obstacles, giving sellers and buyers more confidence in their ability to break free.
2. Offer creative, modern financing options
Buyers want—no, need—options now, especially when they’re standing on the precipice of a high-rate market and deciding whether to jump in. And the waters below can be frightening. According to a recent survey of lenders across the country, 49% of deals fall through due to contingencies, such as a home sale contingency.
Agents and lenders are all aware of traditional financing options, down payment assistance programs, assumable loan opportunities, and rent-to-own possibilities. But these may not be enough for those suffering from severe interest rate paralysis.
Surveyed agents reported that one of the most sought-after solutions in this fickle market are Buy Before You Sell (BBYS) programs, which allow homeowners to easily use their existing equity to eliminate uncertainties.
Imagine telling a client that you can give them a near-instant equity unlock quote, help them make a stronger, non-contingent offer on the house they want, and move in before selling their current home. No temporary housing. No double move. No storage expenses. No long wait times. They can also get a purchase guarantee on their old home, reduce their debt-to-income ratio, and remove their home sale contingency.
These and other modern tools help agents and lenders clear a path for homeowners. Gone are the days of long, complex processes, countless reams of paperwork, and confusing calculations.
Employing innovative, convenient financing options can help unlock the golden handcuffs.
You are the real key
It’s clear that buyers and sellers want off the fence. Homeseekers are looking to agents and lenders as the experts and sources of truth. Help them feel confident by expanding your toolbox and getting back to the basics.
- Educate to instill trust and confidence
- Invest in relationship-building; it’s not only about money
- Present data that highlights the benefits of getting in before rates drop
- Take the time to demonstrate your expertise
- Empower customers by providing innovative options, such as HomeLight’s Buy Before You Sell program
By shifting the narrative from fear to flexibility and equipping clients with the right strategies, industry professionals like you can create more opportunities for everyone. Buyers need bridges; show them you’re a skilled builder.
Watch the short video below to learn more about how HomeLight’s Buy Before You Sell program can help your clients.
To get started, contact HomeLight’s Lender Support Team directly by emailing them at Lenders@HomeLight.com.
Header Image Source: HomeLight
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