Ways to Convince Someone to Buy a House
1. Explain the Benefit of Being a Homeowner
While it may be less expensive to initially rent rather than purchase; explain to friend, family member, or colleague that building equity in a home outweighs the money they save by avoiding homeownership maintenance. A rental deposit may be less than a down payment but statistically, a renter pays more on a monthly basis than if you were to own. Equity pays off (and pays out) in the long term and helps them reach their long-term housing goals. According to an article from risingrealty.com using a survey of consumer finances, the average homeowner who has an annual income of $30,000 to $49,999 has a net worth of $126,500 compared to an equally compensated renter with a net worth of $10,600. Time and time again there is a huge difference between the net worth of owners vs renters.
2. Avoid Using Real Estate Jargon
While it might seem impressive to speak in technical lingo, all those terms may scare off someone who is thinking about buying, especially the young first time home buyer. Buying a house can already seem intimidating, so it may be best to speak to someone who isn’t in the industry or doesn’t have experience in layman’s terms while first explaining the home buying process. Words, phrases, and acronyms that are common for some may be completely new for others. Buyers are typically not offended by having things explained and defined along the way.
3. Have a Lender Reach Out to the Potential Buyer
Knowledge is power. It’s always a great idea to receive information on the financial implications. A lender can take a detailed look at how much a consumer can or can not afford. A lender also may know about certain grants that are out there that will allow you to spend less out of pocket towards their down payment and closing. Having a third party talk through the nitty-gritty of the financial piece will help calm some of the largest amounts of stress/worry. One of the largest misconceptions that prospective buyers now-a-days have is the amount of money needed for down payment. Loan approval is getting tougher now, but gone are the days where you had to have at least twenty percent saved up in order to purchase a home. This is can be a great tactic in getting someone who was on the fence about buying to pull the trigger.
4. Truly Understand Real Estate Investing
Having an investment mindset can open the doors to endless opportunities in convincing individuals to purchase real estate. 1031 tax exchange, conservation easements, and real estate IRAs can be great methods to generate more sales. With 1031 tax exchanges you will be able to help someone sell and purchase (exchange) two different transactions. Understanding how conservation easements work is important to know because while this may be a great tool to use to help someone purchase more land than they realized was in their budget, it is a forever covenant and should be thoroughly explained from the beginning of a client’s land search. If you know someone who is already saving for retirement and has put that money into an IRA or any other type of retirement fund, this can be a great method to help them invest in real estate rather than just the typical stocks and bonds.
While these are just a few methods and strategies to persuade someone to purchase real estate, it is always important to use these tools delicately. Very few people like to be told what to do or coerced into something that they are not prepared to do. On the other end, being too subtle can come across as passive aggressive. Building a trusting relationship is the absolute best tool to earn the right to share advice. And once that door has been opened, there are many pros and cons to discuss with others. For more helpful information be sure to keep browsing our blog.