For the next five minutes or less I’m going to teach you how to handle your buyer’s objections around today’s interest rates and buy a home today. My name is Peter Chabris with joincincinnatistopteam.com and let’s get right into what we can do to handle those objections because Lord knows we’re all hearing them as interest rates continue to rise over over the short term here. So let’s jump in here. The first thing that we do need to know and we talked about this in our last video is that a shifting Market meaning shifting away from an acute seller’s market towards a balanced Market means that our buyers now have leverage, not have the ability to negotiate price and terms that they did not have before. We take this for granted because we’re in the market every single day but not all of our buyers have made this connection in their minds and so it’s time to educate them and form them there are now opportunities to negotiate and get credit prices and terms than we could in the past. So the first thing is have your client agree, yes, I see there’s an ability to negotiate now.
The second thing and this is where I want to spend the majority of our time is explain the concept of a three two one or a 2-1 mortgage. Back in the 80s when interest rates heaven forbid were 18 20 sometimes as high as 21 percent sellers would pay points to lower the buyer’s 30-year fixed interest rate. Well that’s kind of evolved a little bit and there’s a new loan product out there called a three two one or a two one and all that really means is that the seller pays buyers closing costs to buy down the buyer’s interest rate for the short term, specifically three years or two years, and ther is actually a one year. The way it works is in year one the buyers with the seller paying for this for this opportunity the buyer’s interest rate in year one is three percent less than what current interest rates are, in the second year it’s two percent less, and in the third year it’s one percent less, and then the fourth year becomes predominant interest rate is at the time of purchase.
For an example let’s say interest rates were seven percent today, then on this three two one program the buyer’s interest rate would not be seven percent it would be four percent. Last time we saw that was first quarter of 2022. So what’s great about this is that it costs less money because it’s a short-term fix it’s only three or two years and so it only in general costs about four percent of purchase price in buyer paid closing costs by the sellers. It’s a huge opportunity because you can tell your clients hey we can purchase a home now in the short term have an artificially low interest rate until rates just again. That’s the bet that sometime over the next three years the FED will get inflation under control will bring down interest rates and your buyer can refinance now just about every economic Economist is saying yes this is a short-term fix on inflation and so if your buyer believes that is comfortable they can buy at artificially low cost of ownership and refinance when interest rates go back to kind of like the normal five to six seven percent Zone that they typically are.
The third thing that you want to be able to do is handle the objection of them saying something like well I’m going to have to pay full price so I’m going to pay a little bit higher to get the seller to pay those closing costs. Yeah you might have to and this is where you introduce a concept called a level shift. A level shift is where you identify your prospect’s concern and you shift the filter through which they’re seeing that concern if a buyer says well I don’t want to pay full price to have those seller paid closing costs then you just level seven levels to say what I hear you saying is um you don’t want to overpay you want to save money is that right and they say yes and you say great well the real savings in money is not the price you pay because that doesn’t really change your your mortgage payment that much what change your mortgage payment is your cost of ownership and that’s the interest rate and that’s where this 321 becomes such a great opportunity for your clients now if you haven’t heard of the 321 or the 2-1 and there’s even a one one consult with your favorite lender and talk to them about how their program works our job is not to explain the program is to let our clients know what the opportunity is and Route them to the right professional so you got a client that’s interested or concerned about interest rates it’s totally valid what if I could get you a mortgage at three percent less than what current interest rates are is that some something that you’d be open to they’re going to see yes because that will get them back into the game and they can enjoy the opportunities of home ownership today right principal pay down interest right off being a homeowner all the benefits that that includes refinance when interest rates go down you become the hero and you’re able to pull more transactions from your buyers in 2023.
So hopefully this was helpful if you’re interested in watching more videos subscribe to our YouTube channel if that’s where you’re watching this or like our page on Facebook and I’ll see you next week thanks guys.