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Key Takeaways:
- Lay out clear expectations on what the home buying journey is like in your market.
- Educating buyers and keep them informed through the entire process through regular communication.
- Have conversations about potential adjustments in the market and home values.
After 43 years in real estate, Melinda Estridge has experienced it all with first-time homebuyers.
“They usually have a higher degree of trust, their excitement level is up, and they put their faith in you,” says Estridge, founder and owner of The Estridge Group of Long & Foster Gateway Bethesda, Md., Realty.
But there are some differences among her clientele that she’s learned to navigate. While the millennial generation tends to prefer an updated, move-in-ready home, older generations are more willing to do their own work, such as painting, removing wallpaper, and making minor renovations to get a home for a better price in the location they want.
No matter what generation these first-time homebuyers are from, real estate professionals can alleviate some of the anxieties that come with the unknowns, even when helping clients stay within budget in low-inventory markets where competition is intense.
Setting Expectations
“First-time homebuyers typically do not have a lot of confidence that they can actually buy a house,” says Monica LaVerdiere, broker-owner of Bearfoot Realty in Oxford, Maine.
While a seller’s market usually means buyers have to sacrifice some of their wish-list items based on what is available and what type of loan they qualify for, it is still possible for many first-time buyers to find a home.
Real estate pros should lay out clear expectations on what the homebuying journey is currently like in their market while easing fears—and averting potential drama—ahead of time.
“I always tell them they hired me to worry, and they just need to concentrate on the fun, positive parts,” LaVerdiere says.
Educating buyers will help them be more informed throughout the process, which can keep a lot of the fears at bay. For instance, Steve Wener, broker associate at eXp Realty in San Diego, gives a flowchart to all his buyers.
“No matter where they are in the process, they can look at it and understand what’s going on and what’s next,” Wener says.
It’s still common for buyers to get their hopes up for a home, only to lose out in a multiple-offer situation. Because of that, Estridge tells her clients during their first consultation that it’s likely they will lose on three or four houses before they submit an offer that’s accepted.
“It’s a learning experience, and you have to be resilient,” Estridge adds.
Estridge is also having a conversation with her first-time home buyers about upcoming adjustments in the market and home values.
“We are talking to them about making sure they stay in their home for five years or maybe even 10,” she remarks. Some people have to offer a lot of money over asking price to win in a bidding war. It’s a tough situation for those just entering the housing market with not a lot of extra money, she says. If the market adjusts and values come down, some buyers could be underwater. Estridge encourages her clients to buy something they can hold onto or grow into without being forced to move for space or a job transfer.
Give Your Best Advice
Keeping nerves and fears at a minimum for newcomers to the market should be a priority for brokers and agents. Here are some of their best advice to keep their clients calm and informed.
Stay in regular communication. Estridge touches base with her buyers several times a week. “When they become emotional, I speak with them on the phone and listen to their concerns rather than rip off another text or email. I find out what they are upset about and break it down. I never pressure anyone,” she says.
Ease mortgage anguish. “I always promise by buyers that as long as they do what they are advised to do regarding getting approved for a loan, they will find a house,” says LaVerdiere. “It will take time, but it will happen.”
Create a non-threatening environment. Knowledge empowers buyers. So, in addition to his timeline chart, Wener keeps clients up to date on all aspects of the transaction, especially if they hit a snag. He also has an assistant and transaction coordinator who help to keep clients informed, so nothing is left to the last minute. “Fear is real. But fear is even scarier with the unknown, so we help them know what’s next.”
Advise buyers to get a home warranty. What if the water heater breaks and the new homeowners don’t have any funds left to get a new one? Or a roof is damaged in a storm, which could cost upwards of $25,000 to replace? Estridge doesn’t want first-time buyers to have to worry about such problems, so she insists on home warranties to give them peace of mind.
Keep the final walkthrough and closing simple. LaVerdiere communicates with the listing agent and, if appropriate, the sellers during the entire process of the transaction to make sure all contingencies in the contract have been met. “Knowing ahead of time that there won’t be any surprises is the key to calming the buyers’ anxieties,” she says. “Then the closing is a breeze. I tell them to bring a valid I.D. and a big smile.”
