I recently spoke with Sara Williams on the Anewgo New Home Sales podcast to discuss Critical Skills for New Home Sales. There’s a big knowledge gap in the homebuilding industry’s selling skills right now. Financing. Either learn financing or lose new home sales.
Isn’t that the job of the lender?
Why do homebuyers pause? Uncertainty. It’s a big deal to commit to the investment in a new home. It’s understandable they have concerns. Is this the right time? Can I afford to do it? And what can I even afford to buy?
As a new home sales professional, you’re in the business of educating buyers. What about also educating yourself? You should invest in earning a major in New Home Sales and a minor in Financing.
Your minor is learning the basics of mortgages and financing. You don’t need to be an expert, but you must know enough so that you don’t send away a prospective buyer to get this information themselves. Even when you send them off to see a lender—as you’ve probably been taught to do—you’re directing a potential sale away from the exact place where you can sell them the home. I can’t even say you’ve broken the connection yet, because you haven’t established one.
What happens when you let them go?
You open the door and the buyers go to another model home. Why wouldn’t they move on? You haven’t yet emotionally engaged them. They haven’t toured the home. They haven’t imagined themselves living there. They leave your model and keep looking for someone who can guide them farther along the path to purchase.
A simple solution to the financing discussion
It’s relatively easy to pull up a mortgage calculator online or on your builder’s app. But here’s something even easier that Matt Riley of New Home Inc. uses regularly. A real estate calculator. Every new home sales professional should have one of these. Show them the calculations and hand over the real estate calculator. I assure you, it’s effective.
Just ask their annual income, plug in a 30% debt-to-income ratio, and you can reverse engineer the resulting figure for a rough estimation of how much home they can afford. Done. This is not the same as actual prequalification by a lender. You’re sharing the basics of mortgages and financing. The result is that you come away with reasonable parameters that can move you and your buyers to the next step: falling in love with a new home.
Prevent the mis-show
Remember, it’s not about what the home costs, but what they pay each month. When your buyers are comfortable with the monthly payment, you’ve cleared the biggest hurdle—removing uncertainty. You give buyers the confidence to look at homes. More importantly, you know which homes to show them. You don’t show someone a home that is either out of their range or too far below their buying potential.
Partner with a smart lender
Your minor in New Home Financing doesn’t replace the in-depth knowledge of a professional mortgage lender. You must partner with someone who understands the broad options for new home financing, like rate buy-downs and flexibility with down payments.
New school or old school?
I hear people talk about old school tactics. That’s not outdated, because negotiation skills are still fundamental. And your professional success relies on your ability to effectively negotiate. And that real estate calculator might seem old school, but it’s a tried-and-true sales tool.
New school tactics involve maximizing available technology, including digital selling tools, something Sara Williams schools her clients on everyday.
What we’re talking about here isn’t old school versus new school. It’s graduate school! Advance your knowledge of financing and you take your new home sales education to a new level.
Need help? Just ask!
Thank you, Sara Williams, for the opportunity to talk about a topic that is near and dear to my heart: educating new home sales professionals!