Anthony Grasst of Homebridge Financial joins Greg and Kevin this week on The Home Builder Digital Marketing Podcast to educate builders about why financing should be an integral part of marketing.
Anthony explains that if builders will inform potential buyers about financing options “it will lead to higher conversion rates, leads to contracts, and it will shorten your sales cycle, making your sales team more effective. That's why. Let me add a little color right there. Right now, today, in real-time, about 80 to 90% of all new home buyers finance their purchase. Financing is one of the biggest obstacles and concerns for today's home buyers.”
Anthony says that builders should care about financing “because the earlier you engage and educate your buyers, the better chance you have to retain and convert your sales leads and convert them and change them into contracts. You need to control, and this is the important part, you need to control the financing narrative and connect emotionally with your buyer's emotion. The emotional connection, and again, financing can be emotional, leads to action.”
Listen to this week’s episode to learn more about the importance of sharing financing information in marketing messaging.
About the Guest:
Anthony Grasst is the National Sales Director, Builder Division at Homebridge Financial Services, Inc. He is responsible for all mortgage services that serve new home builders and multi-family developers. Anthony's sales teams work with hundreds of builders from across the US and close nearly $2 billion in new home loans each year. He is a regular speaker at home builder association and real estate industry events, and hosts "The Sales Lab" an online education series attended by hundreds of builders and sales professionals from across the country. Anthony is an accomplished real estate finance professional with over 21 years of experience in single-family real estate lending and sales. He holds a BA in Economics and MBA in Business Management.
Greg Bray: [00:00:00] Hello everybody, and welcome to today's episode of The Home Builder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine,
Kevin Weitzel: and I'm Kevin Weitzel with OutHouse.
Greg Bray: And we are excited today to welcome to the show Anthony Grasst, the National Sales Director of the Builder Division at Homebridge Financial. Welcome, Anthony. Thanks for joining us.
Anthony Grasst: Thank you for having me on the program.
Greg Bray: To start us off, Anthony, why don't we get that quick introduction? Help us get to know you a little better.
Anthony Grasst: Great. Well, as you said, I'm the National Sales Director for Homebridge's Builder Division, and well, what is that? [00:01:00] Well, our Builder Division is just a specialized group at Homebridge that supports builders. So, we provide mortgage services and strategies to builders, all the builders we work with. I've been doing this for about 18 years and work with several hundred builders across the country, and I also host a podcast called The Sales Lab, which is an educational podcast for builders and their sales teams that focuses on all aspects of housing. So, there's a little bit about what I do.
Kevin Weitzel: That's a whole lot of business description, Anthony, but here's what I need to know. I need to know something personal about you that people will only learn about on this podcast.
Anthony Grasst: This is something nobody knows until today. I was a member of the Pacific Northwest Regional Barbecue Championship that placed 15th at the Kansas City Royal Nationals.
Kevin Weitzel: What? Preferred cut of meat?
Anthony Grasst: I love grilling wings and that's a whole other subject. We can go [00:02:00] deep on chicken. It's religious.
Kevin Weitzel: So, all dry? Dry rubs?
Anthony Grasst: Yes. I actually brine for 24 hours ahead of time so that the meat pops off the bone. Then it's a combination of smoke and then finish on the grill to render and crisp.
Kevin Weitzel: Now me being the more gravity challenged person on this podcast. Greg probably isn't as interested in this as I am, but I can talk about this for days.
Greg Bray: I like food.
Kevin Weitzel: You like food, but I mean, I love food. I'm intimate with my food. Anyway, thank you for coming on, and grilling, that is something that I didn't know. So, that's pretty cool. Tri-tip or brisket? What's the one to really get your juicy in?
Anthony Grasst: You know what really gets me excited when it comes to cooking is actually a ribeye roast.
Kevin Weitzel: Really?
Anthony Grasst: Yeah, I really enjoy that. Brisket is a full day commitment.
Kevin Weitzel: Yes, it is.
Anthony Grasst: I don't generally have the time to commit the full day anymore, but no, I love the ribeye roast. I do variations of lollipopped rack of lamb, [00:03:00] grilled chicken wings. You're making me hungry now.
Greg Bray: I'm hungry. I'm very hungry. So, yeah, we might have to pause and come back later after lunch. Well, thanks Anthony. That is unique and different. So, how did you get into kind of the career you're in with financing, and then what got you into working specifically with builders as opposed to some of the other things you could have been doing?
Anthony Grasst: Yeah, well, let me be honest. I never planned on being in the home building industry, you know, when I started out. However, throughout my early career, I'd always been exposed and around real estate, which really piqued my interest. My first opportunity is I was a commercial lender for a small bank. You may remember them, Washington Mutual, and I was providing construction lines. I was a commercial banker providing construction lines to builders. Which was land acquisition and development, and I fell in love with the business because of the interaction, the discussions of strategy and market analysis. I just loved it. From there, Washington Mutual decided to fire everybody in that business and focus on pay option arms, [00:04:00] and you know where that ended up.
Anyway, after that, I went to work for First Horizon as their builder division leader and that was my first foray into mortgages and this was really the first time I was responsible for building a platform and leading a large sales force. So, that's how I got into this role, but fell in love with real estate and home building years ago and still love it to this day. It fascinates me. It inspires me. I get motivated it.
Greg Bray: I think I had a checking account at Washington Mutual a long, long time ago. I think I did. I haven't heard that name in a while.
Anthony Grasst: I still own stock and I got the statement the other day and my stock at WaMu is worth 24 cents.
Greg Bray: There you go. All right. Well, tell us a little bit more, Anthony, about Homebridge Financial and what services they offer, focused on the builders, of course.
Anthony Grasst: Well, you know, just a little bit about it. You may or may not be familiar with us. We're a top 20 new home lender in the United States. [00:05:00] We've been doing this for over 25 years. We do a fair amount of business with builders. We close around 4,000 new home purchases a year and what we're really known for is our innovative programs. We provide a lot of sales ideas, strategies, financing, market intel for builders that really help them out and that's what we're really known for. Some things that people are high on us about right now is our extended rate locks. We offer the ability to lock rates out to a year, and we also give buyers' sales leads the ability to lock their rates for up to a year in advance of selecting their home. So, that's just a little bit about us in what we're doing out there.
Greg Bray: Well, I know that Kevin is wondering and because Kevin's wondering, so are listeners, but Greg, this is a marketing podcast, not a financial podcast, and so I just want to let people know that the reason I wanted to talk to Anthony today is because he does a lot [00:06:00] of educating around the marketing space and where financing, and just sales in general, where all that fits together.
So, let's go into marketing direction now and let's talk about why should marketers who are listening today even care at all about financing? Isn't that just something else, a different part of the process?
Anthony Grasst: Great question. The short answer why should you care? Because it will lead to higher conversion rates, leads to contracts, and it will shorten your sales cycle, making your sales team more effective. That's why. Let me add a little color right there. Right now, today, in real time, about 80 to 90% of all new home buyers finance their purchase. Financing is one of the biggest obstacles and concerns for today's home buyers.
Why do you care? Because the earlier you engage and educate your buyers, the better chance you have to retain and convert your sales leads, and convert them and change them into [00:07:00] contracts. You need to control, and this is important part, you need to control the financing narrative and connect emotionally with your buyer's emotion. The emotional connection, and again, financing can be emotional, leads to action.
So, yes, financing is part of the normal purchase process. However, abdication is not a strategy. You're handing over responsibility for communicating the possibility, the affordability, the vision, the emotion, to a third party. You as the builder, really need to paint the picture of affordability and simplicity of the financing process for your buyers while they are researching their new home purchase online. So, if you choose not to engage. If you choose to just say, you know, I'm not going to do this, I'm going to leave it up to somebody else. Then you simply are missing out on a lot of potential sales opportunities because you have all these eyeballs, all these buyers, [00:08:00] on your site, but if they're not engaged, they may not take the next step.
Kevin Weitzel: In a lot of industries anymore, it's so important that you need to make sure that the pathway to be able to purchase things. I mean, you go to Best Buy, everywhere you look, you see these little cards for finance this item. It's easy. Payments as low as X or zero down. So, I assume that builders that don't leverage that are missing out on a huge opportunity of how the buying process can be easy, not just the features of the home.
Anthony Grasst: Correct, and they may be intimidated by, you know, what do I say, and that's where you need to lean on the lender on this. Financing is such a big part of the buy decision. It's a mistake not to address it. The simplicity of the process, the affordability, needs to be highlighted because that's part of that emotional connection to get the buyer to take the next step.
Kevin Weitzel: So, is it not just as easy as just here's your percentage, here's what your payments are going to be?
Anthony Grasst: Should be a little bit more, should have a [00:09:00] message, and again, this is something that we hear a lot from buyers about they're intimidated by the process. So, they want to know that it is a simplified process. That it's a low-stress process. That I didn't know it was that affordable, and that may be things like rent versus buy or some other comparisons out there. You know, I'm in the finance business, so I understand rates, payments, and APRs, but the general buyers out there, this is not what they do every day. So, you need to break down financing in a simplified call to action to get them to take the next step.
Greg Bray: Anthony, you mentioned 80 to 90% of buyers finance a new home. Is that consistent across all age groups and demographics, or is there a huge difference there maybe with a first-time buyer versus a move-up buyer, or things of that nature? Just kind of curious.
Anthony Grasst: Yeah, that's a great question. Well, within our data, it varies by demographic, of course. So, if [00:10:00] you're talking about the Silent Generation versus Boomer versus Gen X, yes, of course. There are more cash buyers in people moving from expensive areas to less expensive areas, people downsizing, things like that. If you look at the overall buyer cohort today, the population of buyers today, nearly 50% are under the age 40. Those buyers are our new home buyers going forward. They're the majority of them and the vast majority of them, approximately 94 to 95%, finance. So, when I'm saying 85 to 90%, that's everybody in one pool. The largest buyers that we have in the new home segment, are heavily reliant on financing.
Greg Bray: So, this is a piece of the buying process that the vast majority of buyers need to be able to deal with. It's something that they don't understand in general, and aren't comfortable with. Fear makes us back off, right, on moving forward. So, what [00:11:00] are some of the things you've seen builders do wrong in their communication and maybe some things that you've seen them do right that helps kind of address some of those issues?
Anthony Grasst: Yeah, that's a really good question. You know, I've been thinking about what do people do right, or what have I seen not done right. Let's talk about that. Some mistakes. The one that just jumps out at me over and over again is there are a lot of builders that just don't discuss financing. It's just not part of anything that they're doing on the marketing side. If there is a reference about financing, it's generally followed by just a couple of sentences, average sentences, non-emotional, and here's our loan officer contact. So, it doesn't add anything to it.
The second thing, and this is another thing that I see common when they are talking about financing or a promotion or something is really incomplete implementation, or a one and done. What I mean by that [00:12:00] is I see them post on their website, but they didn't do anything on social media, they didn't update their OSC, their person online answering buyer's calls. Are they aware of it? Do they have an electronic version? Can they send this out to buyers? Have you sent an email out via your CRM to your sales leads or maybe even your existing pipeline? That's mistake two. It's just incomplete.
Also, what I mean one and done. I put one message out in that's it and what we're finding, especially with sales leads and lead development, is you need to have several messages. You need to have a cadence to your outreach, to your program, to talk about your financing, and that's just not on a specific promotion, but that can be just on the power of financing, the affordability, all the key buzzwords that I'm using.
The third mistake that I see is really crafting a financing message that aligns with your buyer's needs. When you do a [00:13:00] financing promotion, you really need to address your buyer's number one need. This begins by really understanding your buyer preferences. Most builders don't understand the demographics and financing behaviors of their buyers. This type of business intelligence, who are my buyers, how are they financing, what are their stresses on the financing, then creating financing to address that is really powerful. So, those are the mistakes that I see out there. So, those are the big three.
Greg Bray: Let me drill down into that a little bit. So, if I'm understanding you correctly, a single page on the website that says here's two links to a mortgage lender, have a nice day, is not really the kind of education that you're promoting that builders have around financing. Did I summarize that facetiously enough?
Anthony Grasst: Yeah. Well, you know, I didn't mean to make to mean facetious. It's just when I see financing discussed, it's just here's two sentences, here are lenders, here's a link. That's not engaging to buyers. [00:14:00] That's not educational to buyers. That's not moving to buyers. Yeah, you need to have more there. We can talk about that as well in terms of content and what could be on a website.
Greg Bray: I'm going to confess, Anthony, that when we kind of scope out websites for the builders we work with, often in that architecture, financing is just a page and it's kind of a second thought page. I admit we don't spend a lot of time talking about what they should have on that page and how they can take better advantage of it. It really is almost an afterthought a lot of times I confess.
Kevin Weitzel: I'm gonna predicate this with I'm coming in with a loaded question, is it that they're avoiding the opportunity to market the fact that they have vehicles for financing or is it that they're avoiding the topic of financing as much as humanly possible? Like, distancing it because they know that the PITA factor of financing, which it's a necessity. What was the number? 94, 96% of people finance. It's a necessity. So, it has to be discussed. Just like when you go to buy a [00:15:00] car, you know, the kiss of death to dealerships is knowing you have to go sit down with the F and I person. So, is it that they're avoiding it or is it that just not putting enough marketing behind it?
Anthony Grasst: I don't think it's avoidance. Based on my years of experience, this is an area builders don't understand. Of course, because it's not their expertise. Their expertise are their homes, their neighborhoods, the schools, the layout, the livability of the home. That's what they're experts at doing. They understand that. The financing is not an area that they understand deeply. So, to your point, the webpage ends up being static, one-dimensional, nonengaging, but what I'm telling everyone is you can make that engaging. You should make that engaging. Buyers today, expect it to be engaging through their online behavior. And that engagement will significantly help you with your lead retention and your [00:16:00] conversion and make your sales process much more efficient by bringing in people who are ready to go or qualify to have questions answered. It's not that difficult to get to that space.
Greg Bray: Anthony, where do you feel like the right time and the process is to start that conversation about financing? Should we be putting monthly payments next to the price on every page type of a thing to kind of emphasize it, or is it more of after they're a lead we start talking about it? What are your thoughts there?
Anthony Grasst: Well, the right time to bring financing up or to have it be part of the sales process is immediately and I don't mean make that before the home, but when people are online researching a home to purchase they're in the research mode and it's at that time that you want to have content that engages them. Again, number one fear and obstacle for a lot of people is around the financing. If you have content that [00:17:00] engages them in an emotional way, that we have a simplified process, a low stress process, we have things that meet your needs, that level of engagement will significantly help you. Should you feature different financing? Yes, you can, but as step number one, let's have a financing page with quality content that engages buyers and gets them deeper into discussion.
Kevin Weitzel: Has anybody in the industry created an easy button for the financing process? I understand there are certain underwriting processes that have to take place and boxes need to be checked, but is there anybody that has an easy button tool or is that vaporware?
Anthony Grasst: Define easy button.
Kevin Weitzel: To paint the picture? I've purchased three homes in my life. Out of three homes, refinanced two of them and every time I go, in a hair pulling session, where I'm just like, why is this such a pain in the butt to go through this process when I'm a hook, line, sinker, easy guy. I've got this job, this income, this amount of work history. Boom. It [00:18:00] should be real simple and these expenditures. Are there enough isms out there in the system with average buyers to where those checks and measures and checks and balances have to be in place? Or are we just avoiding the 2008, 2009, 2010 of market crash because we're just going, here's some cash go buy a house?
Anthony Grasst: Can it be easy? Is there a technology that eliminates me from verifying my job and that I pay bills? No, no, there, no no, here isn't, but verification of detail and lending processes are not mutually exclusive to a low-stress, efficient process. If that makes sense. You can have a financing process that is well-defined, that is well scripted, that is clearly laid out for your buyers. A lot of buyer dissatisfaction around financing. Is simply due to poor [00:19:00] communication and not setting expectations. So, can you make the process easy on your buyers? Absolutely. Should you start that conversation early? Absolutely, you should.
Absolutely, you should because what happens a lot today is the financing discussion starts when? Thirty days before closing because the home was just listed. Maybe I'm wrong, but there's a lot of emotion tied up in that 30 days. Okay. So, it puts a lot of stress on it. So, engaging them early, getting them in to talk to the lenders, getting that process started will really help, and that's what we're talking about engaging early on that process to remove one of the big obstacles and one of the biggest emotional hazards to the home buying process.
Greg Bray: Do you feel, Anthony, that builders are not diving in here because they kind of feel well, that's the lender's job to make that communication and to set those [00:20:00] expectations and so they're just not even paying attention to it or they just aren't good at it and they know they should be?
Anthony Grasst: I think they depend a lot on the lenders to do that, but I think there's definite responsibility there in terms of what the builder should be doing. You know, I've often said that I want the builder really to vet the lenders out to make sure that they're offering the programs that they need to set the communication and service level standards and to really hold them accountable in terms of buyer surveys and feedback and on-time closings.
You know, again just abdicating it is not a good strategy. You want to set the expectations for the lenders. On the other side, you want the lenders really to provide their processes to understand the builder's processes to be linked in with the communication if there's a conversation log, other things like that. I mean, it takes two people to make the process work well. So, when you say, builders should or shouldn't be [00:21:00] involved, I think they need to be involved in terms of setting the service level expectations, as well as their workflows.
Greg Bray: Does part of the challenge come that some builders kind of let the buyer go get their own financing figured out as opposed to guiding them more in that process and partnering specifically with a particular lender?
Anthony Grasst: Some builders say, let the buyers figure it out. Some builders say, when I let the buyers do that, it creates tremendous stress on our organization. Our transaction coordinators are trying to work with 40 different lenders on 48 closings, for example. Each one has different processes. Each one has different workflows. So, on one hand, the feeling is I don't want to endorse a lender to use. I'm just going to let them do their own thing, but that potentially can cause a lot of stress on the builder's internal team, trying to get things closed, trying to manage the [00:22:00] process. That has a lot to do with it.
Kevin Weitzel: Aren't builders missing out on participation or reserve money that could be made available them? Or does the home building industry not operate like the auto industry? So, when you go to buy a car in the auto industry, the reason why they want you to use their lenders is they get a participation, a percentage of money for realizing the loans through the in-house loan provider. Is that not the case in the home building industry?
Anthony Grasst: Here's the answer. It's no because it's illegal according to RESPA, unless you own your own mortgage company. So, a builder who owns a mortgage company participates in the profit legally, okay? If you don't own your own mortgage company, then your lenders can't share profits because that is considered not in the interest of the buyer's best interest.
The purpose of having lenders is that they can substantially help your business. In other words, they can increase sales. They can simplify the closing process. You can count on their closing on [00:23:00] time, without drama. You're not having to manage 40 different lenders out there. They bring you sales ideas and strategies that help you. They can lower your pipeline risk. A simple way of saying, you know, maybe they're able to do things, for example, like an extended lock, that while you're building a home for somebody in a rising interest rate environment like today, the buyer is protected and the builder's pipeline is protected. There's a lot of value those lenders can bring to the process that both benefit the buyers, which they should, as well as help the builder.And
Greg Bray: And just for the record, Kevin is not advocating that we do anything illegal.
Kevin Weitzel: No. No. But in the auto industry, that is how it works. When you go in and you get approved, they say, Hey, congratulations, Anthony, you just got approved for 1.9% financing. Well, guess what? When they burped your information out to 30 different companies, they got you at 0.5% and they get the increased profit on that 1.4% that they're charging and that's how they make their money and it's usury, [00:24:00] if you ask me, and it should be criminal, but in the auto industry, it's completely legal. I just assumed that that was the case in the home building industry.
Anthony Grasst: Mortgage lending is highly competitive. You have to bring substantial value and a competitive offering. Otherwise, you aren't going to be doing business. That's just the facts. In this business buyers are very astute today. They do their research. They do their studying. So, the lenders that you work with need to have a compelling value proposition for buyers today, but those value propositions can really make the difference for the builder in terms of lowering their risk, increasing their sales, and really capturing more leads, and that's the key.
Greg Bray: So, Anthony, let's go back then to some of the content and the educational content around finances. You know, you've talked about making it more emotional and engaging, but can we get a little deeper into the details of what are some examples of things you've seen work well with some of that educational content?
Anthony Grasst: Yeah, absolutely. Well, let's [00:25:00] talk about the financing page because you mentioned that. You said, normally it's a frame with a couple sentences and some lender contact detail. So, here's some things, and I've been writing on this, I've been speaking on this, I've been talking about this a lot.
The last two years with everything moving online, everybody's used to doing things online. Behaviorly we're all there. When we go to financing, there's just absolutely nothing there or very little. So what are some things that financing pages should have? I'll just read through a litany of different things that are possible options to add to a website.
Number one, and just real basic, on your financing landing page, have an affirmation around financing and why you have lenders. Make it positive, make it about the ease of use, the simplicity, the low-stress on-time closing, understanding of our process, have a unique offering specific to new construction, whatever it may be. I'm [00:26:00] looking at your homes and then I'm like, gosh, how do I finance it? Let me look at their financing page. Oh, oh, that looks good. Right? They're talking about their lenders and how it works. So, number one, a welcome and affirmation.
Number two, a visual or a written outline of the financing process, how it works, what their expectations should be. That's real simple, but again, early setting of expectation. People don't understand the loan process. Do I make application? Is that it? Do I have to follow up with items? Are you going to ask my parents to sign, right? I mean, what are the steps.
Another thing that I think is absolutely valuable, that I see few people do, is a FAQ section, frequently asked questions about lending. Ask your lenders the top 10 questions they get from buyers about the loan process and answer those. Have those available for people to look at. Better yet, do short videos with an answer to each one because it personalizes it and people like to watch video. If [00:27:00] you have a special program or a promotion, great to add that in there. Maybe have a mortgage calculator people can play with.
One of my favorite things, that I think we should have on builder's websites, are infographics. Well, what are those? Those are visual representations of a variety of different things that people can understand. Here's some good examples. Maybe you have, and again, this goes to understanding who your buyers are and where you're building, and this could be by neighborhood, or this could be just all together. You could have a rent versus buy infographic explaining rent versus buy. You could have a wealth accumulation. You could have a cost of waiting. You know, why wait, don't wait, now's the time to buy. You could also have neighborhood data. There's all sorts of wonderful infographics about our neighborhood is looking like this, and there's visual representations of walk scores and other things like that.
These are great things, but then here's where we take it to the next level. What are some other [00:28:00] things that you could do there? So, when a person's online on the financing page, what about having a way that they can ask a question while they're online? So, whether this is a pop-up box for an email that goes to your lender, or even more advanced, which they have today, SMS text messaging, right? Ask your question. We'll get back to you type thing. Great way for people, in anonymity, while researching, to ask financing questions.
Another thing, and one of the best things that I've seen done recently, that I absolutely loved. I saw a builder that had their lender offer a live online financing webinar. I'm not talking, selling the company. I'm talking, explaining financing and the process of buying a new home. People are online. Great idea. Fantastic idea. I love that. Have your lender do a webinar for your sales leads to talk about financing and the new home buying process. What a great way, nonthreatening way to [00:29:00] begin engaging people early.
And then finally with your lender or lenders, have their contact details, their name, their brand, their email, maybe even something that they're offering and then their apply online link. So, basically what you're doing is you're creating an education, like a library, of information that the buyers can research and then add some call to actions to engage the lender. This isn't just like a promotion. Okay. This is basic things that should be on the website today to really engage buyers.
Greg Bray: Where do you start to see then the use of financing in the CRM, in the followup emails and some of those types of engagement opportunities once they're a lead that we're working with and moving forward and down the process? Timing or the type of content that might be useful as they nuture?
Anthony Grasst: I think it's less timing. It's more about mixed [00:30:00] into. So, you have outbound messaging that you're doing in your CRM, and you may be talking about your neighborhoods, your home, your home quality, livability, whatever. Then you want to sprinkle in some of the financing things and that could be financing your new home. You know, some basic questions. So, for example, like I said, those frequently asked questions. In the individual question in order could be sprinkled in to that CRM outbound email. Could be on your social posts as well. Talking about the new home process, things you should expect with your financing, how to protect your interest rate while you are waiting for your home to be built, a variety of different things that are in there, but I think absolutely you should sprinkle that into your content.
I talked to a lot of builders about what is your followup with sales leads and most of them admit, well, we are following up, but we aren't following up as well as we should and sometimes it has to do with [00:31:00] content. So, why not mix in lender content just to keep it fresh and to keep people engaged?
Greg Bray: There's a lot of them that are not doing it at all and a lot of them are not doing it well, that follow up, so more content can only help because sometimes we don't do it because we just don't want to say, are you ready to buy yet? Are you ready to buy yet? You know, we need something else to talk about. Well, Anthony, we appreciate your time today. Just a few more questions though. Everybody is looking at interest rates right now, right? I mean, financing, obviously interest rates is a core part of the financing discussion. There's a lot of upward pressure right now. What are some thoughts as you look ahead in this environment that builders should be thinking about, related to the future of financing and how it may impact things?
Anthony Grasst: Yeah, that's a great question. The key trend, the key market item I'm watching right now is housing affordability. You spoke of interest rates. This is the biggest issue going forward. Affordability is already impacting the market. I can see it with our buyers and we'll continue to, and as I said, nearly 50% of home buyers in our data, [00:32:00] and again, I'm looking across the United States, nearly 50% are buyers under 40 with lower down payment. They really don't have the ability to absorb continual interest rate increases and price increases. Their only course of action in that type of environment is to buy lower-priced homes or stay renting.
Builders need to proactively plan. Well, how can they do that? Builders really need to gain an understanding of their buyer financing preferences. In other words, how are buyers in the area where I'm building and at these price ranges, financing their purchases? This data is available, but you need to get into it, say, what are these behaviors, and then to look at how do I create affordability through financing for these buyers? This is really the key because we can't control the interest rates. The combination of rising interest rates and rising prices, and now inflation, which is affecting cash flow, [00:33:00] will impact buyers. Now, I'm not saying it's going to kill the market. I'm just saying it's definitely going to soften demand.
Just to give you an example, I had a very large builder ask me how sensitive their buyers will be to rising interest rates. So, I reviewed the last hundred loans that we closed and determined that a half a percent increase in interest rate from today would increase their buyer qualification risk. What I mean by that is, how many of their buyers are above qualification? Right. They don't qualify our outside qualification standards. Right now, we see one in five of their buyers outside qualification. With just a half a percent increase in interest rate that goes to one out of two. Yeah.
Greg Bray: Wow.
Anthony Grasst: Yeah.
Kevin Weitzel: That just blew my mind too.
Anthony Grasst: Well, okay, so this is specific to a market. This is specific to younger buyers. It's specific to what's going on. I just raise that point because there's a lot of [00:34:00] discussion that says, and I get a lot of this on social media, Anthony, interest rates are at historic low and you're saying affordability is an issue.
Yes, we're at historically low-interest rates, but the rapid price appreciation we've had the last several years has stripped away the impact that those lower interest rates have created. So, now any upward movement is starting to bump into affordability and I'm not painting a glum picture here. I'm just saying, we can't ignore the fact that this is happening. So, from a builder's perspective, if I understand how buyers are financing, then I need to understand what type of financing I can put in place to create the affordability and I'll finish just with this thought on it. Financing is four times as powerful as price movement with affordability. What I mean by that is a small seller credit applied towards financing can feel [00:35:00] substantial to the buyer. Meaning I had a builder who was looking at like 3,500 in seller credit. If he had applied it towards financing, that would have felt like a $15,000 price cut in terms of payment in qualification for his buyers. So, understanding that in advance will really help you address affordability for your buyers.
Greg Bray: All right. So, just to make sure I understood what that meant. I want to give some type of promotional offering, right? Whether that's a credit towards some upgrade or a credit towards something else, instead you're saying apply that credit to the financing piece and because of the multiplication factor that happens, they get a much larger benefit from it over time.
Anthony Grasst: Absolutely. Now, here's the gold behind it. You don't need to explain the math. When you're talking to the buyer, you simply need to say, and this is the way you say it, you're buying our [00:36:00] $400,000 home in the fantastic brand new neighborhood with all the features and amenities you want, in the school district you want, in the lot you want, and it's the same payment as the $375,000 house. That's how you explain that super power you can create with financing to create that affordability and, you know, if people have questions, I'm happy to take those offline on this, but it's a very powerful way to create affordability for your buyers.
Greg Bray: Well, Anthony, that's great insight. Any last piece of advice before we wrap up that you wanted to make sure you had a chance to share today?
Anthony Grasst: Just two things for the builders who are listening. Number one, really learn about your buyer financing preferences, how they're buying and financing homes in the areas where you're building. Ask your lenders to educate you on the demographics, the trends, the financing preferences. This will open up a world of knowledge for how do I address affordability?
Number two, ask your lenders to help [00:37:00] provide the content I'm talking about. You are not the expert on this. You shouldn't be creating this. They should be helping you, providing you with examples. Yes. You can use your marketing people, of course, but have them give you content tools, social media, marketing pieces. Have them train and explain financing in non-technical language and simple value props to your sales team, so that they can emotionally hook buyers. Talk about financing and then introduce them to your lenders.
Greg Bray: Well, Anthony, we appreciate your time. If people want to get in touch with you, what's the best way for them to connect.
Anthony Grasst: Best way. Well, best way to connect is you can text me directly or call me directly at (206) 245-3656, or you can connect with me on LinkedIn or homebridge.com/builder.
Kevin Weitzel: And because we're podcasts, brethren, name your podcast one more time.
Anthony Grasst: The sales lab.
Greg Bray: All right. We'll be [00:38:00] sure to drop some links to those in our show notes for you as well. So, thank you again, Anthony, for joining us. It's been a interesting discussion. A little bit of a different topic than what we talk about a lot, but I think a very useful and informative, and thank you everybody for listening today to The Home Builder Digital Marketing Podcast. I'm Greg Bray with Blue Tangerine,
Kevin Weitzel: and I'm Kevin Weitzel with OutHouse. Thank you.