Financing Strategies To Selling More High End Homes , Realtor Help.

1. Financing Strategies to
Sell More High End Homes

2. Objectives
• Understand Top 5 Needs of Move-up
Home Buyers
• Implement 7 Strategies to Generate
More Business

3. Move-up Buyer Concern #1:
Cash Flow
Valuable Lessons From Auto Industry:
• Emphasize Monthly Payment vs. Sticker Price
• Marketing Materials - ads, fliers
• Financing discussions with customers
• Emphasize Lifestyle Benefits

4. Move-up Buyer Concern #1:
Cash Flow
Tax Benefits of Moving Up
• Consider Someone In a 35% Tax Bracket:
• $3,000 = Monthly Interest Payment
• $1,050 = 35% (Discount) Tax Benefit
• $1,950 = After Tax Monthly Payment

5. Move-up Buyer Concern #1:
Cash Flow
Innovative Mortgage Strategies:
Ham Story

6. Move-up Buyer Concern #1:
Cash Flow
Innovative Mortgage Strategies
• Interest Only Mortgages
• 5, 7, 10, 30 yr fixed
• LIBOR ARMs – Possible declining rate
environment in 2007?

7. Move-up Buyer Concern #1:
Cash Flow
Innovative Mortgage Strategies
• Cash Flow ARM
• 3% annual appreciation normally pays for deferred
interest
• 90%-100% financing available with tax deductible
Lender Paid Mortgage Insurance

8. Move-up Buyer Concern #1:
Cash Flow
Innovative Mortgage Strategies
• Interest-only 2-1 Buy-down
• 95% financing with tax deductible Lender Paid
Mortgage Insurance
• 3% “deferred interest” all upfront
• Seller paid closing costs

9. Move-up Buyer Concern #1:
Cash Flow
How to Communicate Cash Flow
• Incorporate Financing Discussion Into Initial
Consultation
• Financing Fliers For Different Homes & Price
Ranges
• Translate Sticker Prices Into Monthly Payment
Numbers Through Spreadsheets

10. Move-up Buyer Concern #1:
Cash Flow
Upgrades: Sticker Price: Monthly Cost:
Upgraded Kitchen: $15,000 $63
Marble Foyer: $10,000 $42
Home Theater & Finished Bsmnt: $95,000 $396
Upgraded Landscaping: $50,000 $208
Extra Rooms/Sq. Ftg.
$100,000 $417
For Elderly Parents
Total Cost of Upgrades: $270,000 $1,125

11. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
FACT: Media is not your friend!
• MEDIA IS NOT A GOOD WILL INFORMATION
ENTERPRISE…THEY ARE A BUSINESS
• SPREADING FEAR GETS VIEWERS…AND MAKES
THEM MONEY
• HOUSING BUBBLE = FEAR!

12. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
FACT: Housing is not tied to rates
• Historically, rates have been much higher, during
very vibrant housing markets
• If rates increase .50%, average after-tax house
payment goes up by $8 per week
• Would $8/per week raise change your life? NO.

13. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
FACT: Not like stock market
• Last decade, stocks up 150%, homes up 100%.
Growth does not mean bubble!
• If you sell a stock, do you HAVE to buy another?
– NO.
• But if you sell your home, where will you live?
– Rent? Not likely

14. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
FACT: Watch Housing Inventory
• More homes on market than 50 years ago…but more
population and homes in general than 50 years ago
• PACE of sales is key
• Present pace around 5 months turn time for
inventory
• Watch Existing Home Sales Report

15. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
FACT: Look at Job Market
• Healthy job market = healthy housing market
• Unemployment in US presently around 5.0%...very
healthy
• Watch local job market to gauge health of local
housing market

16. Move-up Buyer Concern #2:
Housing Bubble Worries
Housing Bubble?
BOTTOM LINE…
Localized “frothy” mmaarrkkeettss?? MMaayybbee..
KKeeeepp eeyyeess ooppeenn?? AAllwwaayyss.. BBuutt ddoonn’’tt lleett tthhee mmeeddiiaa
ssccaarree yyoouu……wwaattcchh tthhee rriigghhtt ffaaccttoorrss!!
BBuubbbbllee ppooppppiinngg……..uunnlliikkeellyy!!

17. Move-up Buyer Concern #3:
Interest Rate Worries
Why Do Mortgage Rates Fluctuate?
Understanding the Role of Mortgage Bonds
You Borrow
Money from XYZ
Mortgage Co.
XYZ sells your
mortgage to Fannie
Mae, Freddie Mac or
other investors
Fannie Mae, Freddie Mac and
other mortgage investors issue
Mortgage Backed Securities
on the bond market

18. Move-up Buyer Concern #3:
Interest Rate Worries
Understanding the Current Market

19. Move-up Buyer Concern #3:
Interest Rate Worries

20. Move-up Buyer Concern #3:
Interest Rate Worries
• Long-term Rate Locks
• Alternatives to Long-term Rate Locks
• Understanding the Driving Factors of Interest
Rates
• Economic Reports
• Mortgage Bonds vs. Fed or 10 yr Treasury
• Understanding Economic & Interest Rate Cycles
• 5, 7 and 10 yr ARMs vs. 30 yr Mortgages

21. Move-up Buyer Concern #4:
Home Buying Process
Fear of the Unknown
• Cash flow discussion in beginning of process
• Systems to ensure consistency
• Flow-chart of your unique home buying or selling
process

22. Move-up Buyer Concern #4:
Home Buying Process
Team Building
• If you don’t have an assistant you are one
• Do you get paid to negotiate and close deals or
make copies?
• Team of “advisors”
• Mortgage Planner, Financial Planner, Home
Insurance, Attorney, CPA

23. Move-up Buyer Concern #5:
Is This Really in My Best Interest?
Be a Specialist: Create Trust
• Miracle on 34th St. – Santa Clause Example
• Specialists always make more money
• Earn Referrals From Those Who Don’t Buy With You
• Earn Referrals From Your Competition
• Create Mutually Beneficial Business Alliances With
Other Realtors, Builders and Service Providers

24. Move-up Buyer Concern #5:
Is This Really in My Best Interest?
Be a Strategist: Create Value
• Example: Seller-paid Closing Costs, Buy-downs &
Other Financing Incentives
• Buyer gets a better deal through you vs. another
Realtor
• Buyer deducts points even if paid by seller
• Buyer affords more expensive home through
financing incentives
• Seller makes home more attractive and affordable

25. Top 7 Business Generating
Strategies
1. Client Appreciation Events
• Invite Friends & Family
• Showcase a Listed Home or Builder’s Model
2. E-newsletter
• MMG Weekly / Views You Can Use
3. Annual Client Review
• Family, Job & Career Changes = New RE Needs
• Referrals

26. Top 7 Business Generating
Strategies
4. Alliances with Financial Professionals
• CPAs, Financial Planners, Attorneys
4. Media Press Releases
• Local Real Estate Conditions
• Innovative Strategies – financing incentives, etc.
• Seminars
4. Real Estate Investment Seminars
5. Vacation Home Seminars

27. Course of Action:
Implementation is the Key!
• Strategic Planning Session
• Review of Your Sales Process & Existing
Marketing Materials
• Marketing Plan & Scripting
• Specific Implementation of Some of These Ideas
• You sell more homes!