Since the NAR commission suit settlement, buyer agents have faced new rules, new documents and a new normal. This month, Inman drills down on Today’s Buyers Agent with the fresh marketing strategies, skills and tools buyer agents are using to prosper in changing times.
Let’s face it: Your clients don’t care about your Instagram followers or whether you or your company is No. 1. In today’s tough market, what they care about most is money. If you want to build a database of raving fans, here are seven ways you can help save them serious money.
1. Save them an average of $18,000
Down Payment Assistance (DPA) programs remain one of the least-used tools in most agents’ financial arsenal. According to Rob Chrane of DownPaymentResource.com, over 80 percent of all non-homeowners believe they need 10-20 percent down to purchase a home.
The reality? There are more than 2,400 DPA programs across the U.S. that offer grants, forgivable loans, matching savings plans or subsidized mortgages to help buyers get started with far less.
Moreover, over 84 percent of the homes in the U.S. (and in some cases mobile homes) are eligible for DPA. Here’s what you need to know:
- The average amount of DPA granted last year was $18,000.
- Two-thirds of the DPA programs are for first-time buyers or those who have not owned a home in the past three years. The other third is available to those who currently own homes, provided they meet certain financial requirements.
- Veterans, teachers, first responders and low- to moderate-income buyers may qualify for grants as high as $40,000.
- Mortgage Credit Certificates (MCCs) offer up to $2,000 annually in dollar-for-dollar tax credits for the life of the loan. This is not a deduction, but a direct reduction in the amount of how much you pay in taxes. In some markets, this can add up to $60,000 in savings for a homeowner paying off their mortgage over 30 years.
- You can “stack” DPA programs. One savvy agent in Seattle stacked five programs to help her buyers buy a property worth almost $1 million.
If you aren’t already working with a lender who specializes in these programs, now’s the time to identify these companies/organizations in your market.
An easy way to see what DPA is available on any active listing on Realtor.com or Zillow is to navigate to the mortgage payment information on that listing. If DPA is available, both sites will list the programs and the resources available for that specific property.
2. Show clients how to eliminate PMI early
Private Mortgage Insurance (PMI) is an invisible money leak for many buyers. Most of your clients and prospects will have no idea they can eliminate PMI, not when they have paid down 20 percent of their loan, but when they can demonstrate they have a 20 percent equity position in their property. (This will require an appraisal.)
If you’re in a market that has appreciated 20 percent since any of your clients purchased their home or if they have added square footage, updated the kitchen or even improved landscaping significantly, that new value could eliminate their PMI now rather than years from now.
PMI typically costs hundreds of dollars a month. Canceling it early puts thousands back into your client’s pockets, turning you into their financial hero.
Check out Bankrate for an excellent guide to cancelling PMI.
3. Give your new listings more market time
Did you know that Friday is the best day to put a new listing on the market? The reason is that most people look on the weekends, plus on Saturday and Sunday, there is no new competition coming on the market until Monday.
I’ve seen numerous studies over the years showing that this approach almost always nets the seller more money as compared with listing on any other day of the week.
4. Boomerang buyers
“Boomerang buyers” are former homeowners who lost their homes in foreclosure, sold in a short sale or who may have had to move into a rental due to a loss of income from a divorce, illness or other event.
Many don’t realize that they can qualify to buy a home as a first-time buyer (provided they haven’t owned a property in the past three years) with a reduced down payment and down payment assistance.
If any of your past clients have experienced this situation, advise them that they may now be able to become a homeowner again and to stop paying their landlord’s mortgage rather than their own.
5. Maximize credit scoring strategies before preapproval
Credit scores not only influence whether a borrower will qualify for a loan but also the rate and terms. To help your clients maximize their credit score before applying for a mortgage pre-approval, have them do the following:
- Check their credit score on Equifax, Experian and Transunion for errors. Correct those before applying for a loan.
- Make sure all their payments are made on time.
- Advise them to avoid applying for any other type of credit, especially before closing, because along with increased credit comes an increase in payment obligations, which in turn can destroy their ability to qualify.
For example, when we purchased our new home, we only had one car but needed two. Nevertheless, we postponed picking up our new SUV and ordering new furniture until the transaction closed and we had our keys in hand.
- Do not close existing credit card accounts. Instead, advise your clients to buy a small item on the card every couple of months and pay it off immediately. While having a card that has no balance is great, it’s even better for your credit score when you use it periodically to purchase one item and pay it off.
- Explain how to improve their “credit utilization ratio.” While this sounds complex, it’s simply a matter of them paying down their existing debt. Banks typically like to see a credit utilization ratio of 30 percent or less when assessing mortgage applications. This means using no more than 30 percent of your total available credit across all credit cards and other revolving credit accounts. Keeping your credit utilization low demonstrates responsible credit management to lenders.
A better interest rate and terms translate into lower monthly payments, and the potential for long-term savings in the tens of thousands.
6. Leverage energy rebates and tax credits in 2025
With the Inflation Reduction Act in effect, there are now dozens of federal, state and utility rebates available for energy-efficient home upgrades. Sadly, most buyers are completely unaware of them.
The IRS has published a comprehensive list of options as well as a series of articles on this important topic. Some of the most notable ones cited include:
- Be efficient by saving on your energy bills by upgrading your appliances. Water heaters, air conditioners and certain stoves qualify for a 30 percent tax credit when you upgrade to newer more-efficient models.
- Don’t wait — insulate. Having air leaks or poor insulation in your home is like watching money literally escape through the cracks. Don’t let it happen to you! Weatherize your home with a 30 percent tax credit on insulation, doors and windows.
- Under the Inflation Reduction Act, you can get a tax credit for 30 percent of the cost of installing clean energy systems in your home, including solar panels, wind turbines, battery storage and more.
- Heat pumps are rapidly gaining popularity as an energy-efficient option for home heating and cooling. With a 30 percent tax credit available for a range of heat pump solutions (up to $2,000 per year), it’s a great time to investigate if this clean technology is right for your home.
- Local utility companies often offer their own rebates. Check their websites for what’s available now, and share it, not only with your current buyers and sellers but also with past clients and your sphere.
7. Help your global buyers save tens of thousands of dollars
If you’re working with buyers who are from outside the U.S. and they do not have green cards, you absolutely must advise them to see an immigration attorney who specializes in tax law for foreign investors in the U.S. prior to writing an offer on any property. Here’s why.
- If your buyers purchase and take the property in their own name, they will be unable to deduct depreciation if this purchase is an investment property, nor will they be eligible to do a 1031 tax-deferred exchange.
- In addition, the entire amount of their sale proceeds when they sell, whether it was an investment or their primary residence, will probably be subject to both state and federal income tax.
- Here’s the biggest challenge, however. Failing to use an offshore LLC could result in their offshore income being taxed by U.S. authorities in some states. The most notable case is in California, where, if this issue is not addressed, it could result in a substantial part of all their offshore income becoming subject to California state income tax.
The bottom line is that saving clients and prospects money is the best marketing you will ever do, whether it’s helping them obtain DPA, cutting their PMI, finding rebates or helping them obtain a more favorable mortgage at a better rate. Not only are you helping them, but you are also creating connection and trust, the foundation for building raving fans, referrals and repeat business.
Bernice Ross, president and CEO of BrokerageUP and RealEstateCoach.com, the founder of Profit.RealEstate and a national speaker, author and trainer with over 1,500 published articles.
