How to Handle Homebuyers in a Post-Financial Crisis World
It is no longer news to hear that since the Financial Crisis many things have changed, and countless people have had to cope with a drastically negative transformation in their financial lives. What is coming as news are the lasting effects the Crisis is having on consumer behavior. Absolute Strategy Research’s (“ASR”) recent consumer survey brings results from the past three years on U.S. Household Finances showing a definitive change in consumer attitudes towards debt. Two out of every three Americans questioned believe that the Financial Crisis has fundamentally changed their attitude towards debt, and almost half those polled are not prepared to take any risk with their savings. There is a serious collapse in consumer confidence due to negative wealth effects; 27% of Americans believe their homes are worth less than what they owe on their mortgage.
What Consumers Need Now
With these statistics it is clear to see that consumers aren’t confident that housing is a good investment at the present time. The group reporting a change in attitude towards debt in the study tends to be much more hesitant to take financial risk; only 24% are prepared to take risks with their savings. With these results, we should expect many more buyers to focus on whether or not the decision to buy a home or invest in real estate makes financial sense. What consumers need now is a higher sense of security; they need to know that the decision they are making is a good investment with low risk factors in the long-term. They need information about the long-term effects that buying a home will have on their finances.
How Real Estate Agents Can Help
Real estate agents can’t expect to continue their practices without responding in some way to these changes in consumer attitudes. Consumer hesitancy poses real estate agents with a new challenge and an opportunity, the opportunity to be integral in forming a response to consumer apprehension by helping to ease hesitancy when it comes to making investments in real estate. The role of the real estate agent can be first to inform clients in an open and honest way about what the process of buying a home entails and what options there are available to consumers on the market within their means. The future of the housing market hinges upon a new investment in communication between agents and consumers.
Tools For Change: Confidence Building Calculators
Perhaps the best resources available to help consumers work through their hesitancy are decision-making tools, and fortunately there are a host of these tools and financial calculators online. While a lot of them begin to address consumer needs, most haven’t changed since the late nineties, and it didn’t take a lot of thought from the SmartAsset team (www.smartasset.com)to realize that today’s consumer, having grown up with the internet, expects much more. That is why we have developed a web app that helps consumers to measure affordability, evaluate financing alternatives, and test the cash flow impact for big financial decisions such as buying a home. With a few pieces of information from a potential home buyer, our tool can help determine how much home a particular consumer can afford and how best to finance it. It spells out the ramifications of their decision and allows them to see how it will affect their finances over time; we think it is an awesome tool in terms of providing consumers with the information they need when trying to decide if a decision makes financial sense. If real estate agents can tap into this resource and help consumers through the home buying process with it, we think this can lead to a constructive way of working through consumer hesitancy towards investment in real estate. There is no reason why real estate agents can’t take part in providing consumers with actionable, objective, personalized, and easy-to-understand advice. Trustworthy information feeds consumer confidence, and everyone has something to gain from this.
This article was written by Michael Carvin the Founder and CEO of Smart Asset. Check out his site to get a free invite to his software www.smartasset.com