Every real estate agent wants to work with more buyer and seller clients. But what separates the best agents from the rest, is how they obtain these buyer clients. Many top agents view and use rentals a way to connect with future buyers, and, in particular, first time home-buyers.
The key to converting a renter into a buyer starts at your first interaction. You need to ask questions, educate your lead, and continuously follow-up. When done correctly, converting renters into buyers is an invaluable source of revenue for your business–you’ll earn both a rental commission and a buyers commission! Agents with proper follow-up plans report converting almost 30% of their rental clients into buyers! Use our tips and tricks below to convert renters to buyers at a higher percentage!
Near-Term vs. Long-Term
Before we go any further, it’s important to understand that every client’s buying timeline will be different. We like to segment renters who will become buyers into two groups: near-term buyers and long-term buyers. They require different handling.
Near-term buyers are an agent’s dream. Usually they will mention their intention to buy early, making your job easier. However, a common mistake with this client segment is to solely focus on the client’s home-buying prospects and ignore their rental search. This is sure way to lose the client!
The best way to convert a near-term buyer is to not lose focus on their current need-finding a place to rent. Then once they are settled, start to focus your attention on their home-buying needs.
The sales conversion cycle for this client will be a bit longer than near-term buyers, but with continual outreach you can convert them. If the client is a long-term buyer, you will have to guide the conversation of buying a property from the get go, and keep in touch once you have found them a rental. When done correctly, continuous outreach should not take an enormous amount of effort. The key to continual outreach is to stay organized so you can properly schedule your intermittent outreach.
Understanding Your Client’s Situation
Determining your client’s timeline can be a bit tricky if you don’t know what types of questions to ask. Your questions should center around your client’s motivation for moving, their employment situation, and their prior experiences with home ownership. Once you dig deeper into these topics, you will get a clearer picture of their buying timeline.
Why are they moving?
It sounds simple, but fully understanding why a person is moving can give you a glimpse into their propensity to buy. We interact with thousands of people looking to move on a weekly basis and we have yet to meet someone who is moving for fun! Their motivation for moving is usually directly tied to their propensity to buy.
- A renter client who is looking to purchase, but there is limited inventory of homes for sale… potential near-term buyer.
- A renter client who is moving in with their significant other… potential near-term or long-term buyer.
- A renter client whose family is growing as they are expecting a child… potential long-term buyer.
- A renter client who is relocating for a new job and is renting before they purchase… potential long-term buyer.
- A renter client who is looking with their roommates for a new apartment… potential long-term buyer.
What is their employment and career situation?
Talking with your client about their employment situation and what their career could look like in the next couple of years will help you gauge their propensity to buy. For instance, if your renter client is planning on relocating to a different city in the next year or so, they are probably not a great candidate to buy and you should spend your time elsewhere.
- A renter client who has stable employment and is not expecting to relocate… potential near-term buyer.
- A renter client who is just starting their career but has expressed interest in buying… potential long-term buyer.
- A renter client who has stable employment, but unsure where their career will take them… potential long-term buyer.
- A renter client who is just starting their career and is planning on relocating to a different city… unlikely buyer.
Have they owned a home before?
If they have owned a home in the past that will almost certainly influence their propensity to buy. Ask questions to better understand their homeownership experiences.
- A renter client who is relocating and has previously owned a house… potential near-term buyer.
- A renter client who has owned a home before, but is finding limited inventory… potential near-term buyer.
- A renter client who has previously owned a house and does not want the corresponding responsibility… unlikely to buy, focus efforts elsewhere.
Buying “Hot Buttons”
Sometimes while discussing their must-haves for an apartment, your client will mention what we call “hot buttons.” These special requests are usually a strong indicator that your renter is a potential buyer because the rental inventory for their criteria is limited. You should be listening for these “hot buttons,” and curating your own list as your gain experience working with renters. Some of the more common “hot buttons” we hear:
- A client who needs a backyard because they have a large dog… a rental that both allows a dog and has a large backyard can be difficult to find. Purchasing a home could be more practical than renting.
- A client who lives with one or both parents…. the client is most likely for spacious rental, (and so is everyone else.) Purchasing a home could be more practical than renting.
- A client who is looking for three or more bedrooms….the more bedrooms, the harder a rental will be to find. Purchasing a home could be more practical than renting.
Hearing a “hot button” request from a client is certainly not a guaranteed renter to buyer conversion, but in some cases purchasing may be more practical than renting. Let your client know the potential benefits of renting.
Perceived Pain Points
Educating your renter client about homeownership and removing any misconceptions about cost is key. Your renter may believe homeownership is unobtainable because of the perceived high costs or lack of flexibility with credit history. Thankfully, they have you to help guide them into an informed!
“Renter is cheaper than buying!”
This is totally dependent on the local market and the client’s financial history. In many situations, the client’s monthly mortgage payment would be less than monthly rent. To give your client and idea of their mortgage payment connect them with your preferred mortgage specialist.
“20% is needed for a downpayment!”
Nope! There are over 2,300+ local, state, federal, private and non-profit programs to help buyers with their down payment. For instance, a Veteran’s down payment could be largely decreased if they apply for a VA Home Loan. To learn more about the different programs available to help buyers decrease their downpayment, talk with your preferred mortgage specialist.
Outreach, Outreach, Outreach!
Whether your renter client will be a near-term or long-term conversion, continual outreach out is the key to a successful conversion. Your outreach could be as small as letting them know a new restaurant opened in their neighborhood, or as important as wishing them a “Happy Birthday!” All that matters is you stay in communication with them, so they contact you when looking to move again.
Top agents will continue to check-in with clients even if they don’t think this client will be a renter to buyer conversion. Keeping in touch with clients increases your sphere of influence and will keep you top of mind, increasing the likelihood of past clients sending referrals. The bottom line is you are in the relationship business so keep relationships with renters to increase your businesses revenue!
Enrolling in Boot Camp: Convert Renters into Buyers
This help article is meant to give you an overview of the proper steps needed to convert your renters into buyers. For more renter to buyer conversion training and strategies, enroll in “Boot Camp: Convert Renters to Buyers” using the “Education” tab in your Rental Beast portal.
Step by step:
- Log into Rental Beast (www.rentalbeast.com)
- Click the “Education” tab
- A new Rental Beast University tab will open on your browser. If it does not, check your pop-up blocker
- Near the top left of your screen, click “Dashboard” and select “Catalog” from the drop down menu
- Find the course labeled “Boot Camp: Convert Renters to Buyer” and click “Enroll”.
- You are now enrolled!