When rates move higher, even committed buyers get nervous. I may have pre-approved someone a month ago, and now rates are half a point higher. When I go back to update the numbers, they get sticker shock. In this environment, that's when they call another lender for a second opinion.
You're not driving the market. Inflation, the Fed, the headlines, those are market moves. But your clients are yours to lose. And your process is what gives them the confidence to keep moving forward and not shop you every time the market moves.
So here are the six things I'm doing right now.
- 1Have a processLead every client the same way from first conversation to closing.
- 2Open the lines of communicationMore volatility means more communication, not less.
- 3Know your numbersRate history, inventory, and the whole financial picture.
- 4Give them a hedgeBuy now, refinance later with a no cost refi.
- 5Communicate your competitive advantageShow them why working with you is about more than rate.
- 6Close for commitmentNever assume they're committed. Ask.
1. Have a Process
It's more important today than ever that you lead clients through a process. A great first call. A completed application and uploaded docs. Then a 30 minute loan consultation where we build a clear move plan: sales price, monthly payment, cash to close, and answers to any and all of their questions. Same way every time.
2. Open the Lines of Communication
Inside that loan consultation, somebody's going to ask about rates. Whether you bring it up or not, they're thinking about it. So I ask first.
Ask Before You Tell"What are you hearing about interest rates right now?"
"Do you know what's making that move in the marketplace?"
Their answer tells me where they are mentally. Some people think rates are in the low sixes. Some have seen headlines about the sevens. It tells me how much education they need, and it lets me be the calming force that leads them to what they actually want: their first home, their next home, their dream home.
3. Know Your Numbers
This is how you take the emotion out of it. Data removes emotion. Facts over feeling. Most buyers are comparing today's rates to an emergency period that's unlikely to happen again. Look at the history.
| Period | Average 30-Year Rate |
|---|---|
| 1970s | About 9% |
| 1980s | About 13% |
| 1990s | About 7.8% |
| 2000 to 2009 | 6.18% |
| 2010 to 2019 | 4.03% |
| 2020 to present | 6.26% |
| Long term median since 1971 | 7.1% |
Outside of the financial crash and COVID, rates have lived between 6 and 8 percent. Today's rates aren't the lowest they've been. They're also not terrible.
Then I talk about inventory. With four to five and a half months of inventory in my market right now, buyers can find the right home in the right location, condition, and price. And almost every buyer we have, whether the price is 200 thousand or a million, is getting some form of seller contribution. That preserves their cash, and it often goes further than an eighth or a quarter point on the rate.
Waiting doesn't always save you money. Have a story like that ready. Stories sell.
4. Give Them a Hedge
We buy now. My team and I keep an eye on the market, and when rates move lower, we help you refinance with our no cost refi. I don't predict where the market will be. Could be a year, could be four. I just give them the hedge.
Don't have a no cost refi? You do now. Reduce your margin to cover the costs. Yes, you make less on the refi. But you keep the client, you earn the repeat business, and you give them the confidence to buy today. People get excited when they know they're not stuck.
5. Communicate Your Competitive Advantage
When someone asks what makes me different, I tell them working with me gives them the local competitive advantage. Then I show them what that means.
We recently won a multiple offer situation that way. The listing agent texted me afterward: we weren't the highest offer, but they felt the most confident in our ability to close quickly with no chaos. Whatever your advantages are, write down two or three and say them every time.
6. Close for Commitment
You can do steps one through five perfectly, and if you don't ask for commitment, you're in trouble. Before I started asking, I was losing about 4 out of 10. In a rising rate environment, I'd bet it's even more.
The Commitment Ask"Is there anything that would prevent me from being your lender and helping you go all the way through to closing?"
If they say no, you're my guy, high five and move on. If they have an objection, work to overcome it. If they still won't commit, stop putting the full resource of your office behind them until they do. You were going to lose them anyway. Wouldn't you rather know before you put in all the time and effort?
Get Steve's Talking Points guide. The rate history, inventory, and talking points I'm using with buyers right now. Email [email protected] with "Talking Points" in the subject line and the team will send it to you.
Want the full first call and loan consultation process?
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See the 5-Day Challenge →You're the leader. You're the loan officer. They came to you for a solution. Lead them confidently through the process.
Anything worth doing is worth doing badly. Just get started.