As we head into the kick-off month to real estate’s sell season now is the perfect time to fully connect with your inner sales warrior. Embracing the three 3-3-3 Rules will help you do just that by supercharging your efforts and focusing your energy. Chances are you already know some of these concepts but didn’t realize their identifications as memorable numerical guidelines to keep you and your clients on the right track. It’s time for a reminder! With that said, just what is the magic of the 3-3-3 Rule in real estate?
Three Versions
As mentioned, there are three different versions of the 3-3-3 Rule, which reinforces the number three and makes these rules easier to remember. As an agent all three are good to know as they help you counsel your clients and fine-tune your marketing. And giving good counsel and fine-tuning your marketing are great ways to make you a more effective professional.
(1) The 3-3-3 Rule for Buyers
The 3-3-3 Rule is probably best known as a financial safety net for buyers and something they should have in place if they are truly ready to buy. The 3-3-3 Rule includes: three months of emergency savings for unexpected expenses, three months of mortgage payments saved, and three property evaluations before deciding on a specific purchase. The ability of your buyers to meet this framework will also help them qualify for a loan. (Meanwhile, lenders have their own rules which are generally 20% down payment, credit score minimum of 620, steady employment, debt-to-income ratio at a max of 45%, and an appraisal that ideally meets the purchase price.)
Things for your buyers to keep in mind:
- Maintain your safety net – Don’t buy with almost no money left or you’ll struggle if something breaks. (And, consider a home warranty for extra peace of mind for those unexpected maintenance expenses.)
- Preview at least 3 properties – Compare at least three or you could be in danger of over-paying.
- Make sure you can afford insurance and taxes – Property insurance and taxes can be a substantial amount in addition to your monthly mortgage payment and should not be overlooked. Make sure you understand these costs at the front-end of the negotiating process.
- Avoid FOMO, don’t rush – Take your time to save and compare. Don’t feel pressured to rush into a decision. A few months of prep can save you years of stress.
(2) The 3-3-3 Rule for Agents
The 3-3-3 Rule can also apply quite effectively to an agent’s marketing strategy: Call 3, Send 3 notes, Share 3 resources. Ideally this should be done three (yes, 3!) times a week.
Call 3: Call 3 potential clients/referrals to build rapport.
Send 3: Send 3 personal, handwritten notes to build trust and show appreciation.
Share 3: Share 3 pieces of content, such as market updates, neighborhood guides, lender information, or vendor referrals.
(3) The 30-30-3 Rule
The third version of the 3-3-3 Rule is the 30/30/3 Rule, which focuses on whether buyers can comfortably afford the house they want. As such, no more than 30% of gross income should be used for housing (including mortgage, taxes, insurance and maintenance); they should plan to make a 30% down payment to make payments manageable; and the home value should be in the neighborhood of no more than 3x their salary.
As you know, lenders will often stretch the percentage for gross income up to 45% but that can be an unrealistically high number and put buyers in a bad way down the road. Homeownership should not make people house-poor and constantly strapped for money or they might not be homeowners for long. Comfortable, affordable homeownership is the ideal goal but for many, it’s also a high bar in today’s market.