Helping a first time home buyer find their dream property can be a very rewarding experience, but many agents would rather focus on sellers.
Why is that?
Buyer agents representing a first time home buyer have a lot of challenges to overcome besides the lack of inventory and competitive bidding. For a number of reasons, first-time buyers often make costly mistakes that reflect poorly on agents.
People selling their home are more experienced buyers and tend to have a much bigger budget than first-time buyers. Most new home buyers have unreasonable expectations, limited time, limited resources, and zero experience with property transactions.
Quite often, couples or individuals entering the housing market for the first time are naive about the documentation, financial, and administrative details of purchasing a home. They lack the experience of existing homeowners and aren’t really sure what they want or need.
Overcoming first time buyer objections is difficult, especially if you’re a new agent and don’t have an established track record. Guiding prospective buyers through the arduous process of homeownership takes a firm hand, and a lot of confidence in your real estate expertise.
So what’s the best way to help a first time home buyer find their dream home?
Common First Time Home Buyer Mistakes
Unaware of closing costs…
Legal fees, land transfer taxes, property taxes, utilities and other costs are often overlooked by first time home buyers.
Choosing the wrong payment schedule…
Reducing the length of the amortization schedule reduces the cost of your mortgage significantly over time, but many home buyers entering the market for the first time spend thousands of dollars more in interest because they don’t use a mortgage calculator to determine a suitable payment schedule.
Too focused on interest rates…
Low-interest rates attract buyers, but interest is only one factor that impacts the cost of a home, and certainly not the most significant. Many first time buyers mistakenly believe a lower interest rate will save them money, overlooking other long term factors that can impact monthly mortgage payments and closing costs.
Poor budgeting
Owning a home carries ongoing maintenance costs that are only apparent after the sale. Repairs, higher insurance fees, and unexpected expenses can leave a first time home buyer strapped for funds and struggling to make timely mortgage payments.
Low down payment
In many cases, a significant downpayment is needed to qualify for a home. Few first-time buyers are aware of their down payment options. Their down payment is not enough to qualify for the home they’d really like, or they end up paying higher premiums on their loan over the life of their mortgage.
First Time Home Buyer Statistics
Marketing to buyers requires a knowledge of the housing market, and who’s buying. So, if you’re considering adding a few first-time buyers to your portfolio, or launching your real estate career as a buying agent, here are some of the facts you should know:
- In 2016, 35% of homes bought were first time home buyers
- 18% of the first time home buyer market were single females (compared to 8% for single men)
- 58% of first time home buyers market was families
- 66% of the first time buyer market was age 36yrs or younger
Key Takeaways
From the figures above, it’s pretty clear that your marketing should appeal to both men and women, particularly Gen X’ers (b. Approximately 1961 – 81).
With a 35% share of the total market, winning first-time buyers to your roster of clients can have a significant impact on your bottom line.
But serving these new, eager, up-and-comers will be a whole different ballgame than you might be used to as a listing agent.
8 Useful Tips To Help A First Time Home Buyer
Successful realtor Loida Velasquez coaches aspiring real estate agents through her YouTube videos, webinars, and coaching events. She’s used her marketing background and real estate expertise to mentor other agents in California on how to build their real estate career one client at a time.
Her advice for helping a first time home buyer is simple, direct, and actionable:
Loida’s advice is great for any agent, new or seasoned. We’ve expanded on her tips to provide you with some more practical ideas for working with new homebuyers in your target farm:
#1) Manage First Time Buyer Expectations
It may be tempting to promise first time buyers the moon, but managing expectations is the key to success as a buyer agent. Quite often, buyers need to be educated and guided through the process of searching for the right home at every step of the way.
Qualify the first time home buyer before booking an in-person meeting or consultation.
Many first time buyers insist on meeting with an agent, when they haven’t been approved for a mortgage, and don’t know their credit score.
Don’t be so eager to book a consultation until your prospect has met with a lender. You’ll waste time, gas, and money for both you and your client. If they are serious about buying a home, they won’t object to this first crucial step.
#2) Send Unqualified Buyers To A Lender
Part of your job as an agent is to facilitate the homebuyer process. Reach out to the contacts in your network and help your client find a lender. First time buyers will appreciate your help and you’ll convince them that you are resourceful.
#3) Educate Non-qualified Buyers
Proof of funds, a pre-approval letter from a lender, and direct underwriter approval from mortgage insurance. Most first time buyers have no idea what documents are required to bid on a home.
Even if your prospect has not been prequalified, provide them with a neat package that outlines in detail the steps to bidding on a home. They’ll remember you when they are ready to buy.
#4) Find Out Details About Your Buyer’s Ideal Home and Neighborhood.
When you do get a prospect who has been pre-qualified, you can book an in-person consultation. During the face to face meeting, you’ll want to draw out the details of your client’s ‘must haves’.
Are they looking to commute less? A community with lots of children? More closet space? The more specific the details, the less time you’ll spend scouting properties that don’t match.
#5) Prepare A list of Potential Properties That Meet The Buyer’s Criteria.
Provide your prospective first time buyer with a comprehensive list of all the available properties that match their criteria. Make your list easy to read, with addresses and key statistics clearly laid out.
#6) Book A Follow-up Meeting To Go Over The List In Person.
Your follow-up meeting is another opportunity to clarify your buyer’s needs and wants. It shows you are invested, and you’ll cut down on unnecessary communications by being present to answer their questions face to face.
#7) Get Your Client To Visit The Properties.
A simple drive-by of the properties listed will help your clients narrow their list of choices to the most desirable properties. You can then contact the listing agent to book a showing with your clients.
#8) Be Responsive And Attentive At Every Step.
First-time buyers have a lot of questions. They may come in at 5 minutes to midnight, or while you’re driving, but your responsiveness will put your buyers at ease. Answer texts as soon as possible, respond to emails, and be proactive in your communications.
If you suspect your clients need more information about a property, mortgage options, or anything, else, insist on clarifying these points before moving to the next step. Enlist the help of other professionals to explain aspects of the transaction you may not be clear about yourself.
Summary
First time home buyers are the most vulnerable clients because of their lack of experience. As an agent, your role is to educate buyers and provide them with firm guidance.
Strong communications skills will save you and your prospects time as well as money. If you take the time to explain the buying process and listen carefully to your client’s needs, you can significantly reduce the stress and frustration many first time buyers feel.
Make your clients feel like you care more about their success than your commission by being forthright, transparent, and accessible at every step.
Happy selling!
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