This April, one of Inman’s most popular recurring theme months returns: Back to Basics. All month, real estate professionals from across the country share what’s working for them, how they’ve evolved their systems and tools, and where they’re investing personally and professionally to drive growth in 2022. It’s always smart to go Back to Basics with Inman.
There is something quite magical about the look on new buyers’ faces as they pick up the keys to their very first home at the closing table.
For me, the emotional reward is just as valuable as the commission. This is important because first-time buyers usually require more energy and effort. They place more trust in their brokers than experienced buyers, which also results in a bigger responsibility for the broker.
First-time buyers trust us to guide them through the buying process, toward making the decisions with which they will be happy in the years to come. If you do your job right, they will remember you as someone who really cared about their finding a wonderful home.
The first-time buyer pool is diverse and always interesting. My last one was in her 70s, and she was great fun to work with.
Introducing yourself to your first-time buyers
I generally start out with a face-to-face meeting if possible because it’s easier for everyone to get to know one another in person, but I will resort to a phone call or Zoom if absolutely necessary.
I start with a brief description of my experience, background and what they can expect from me. Then, I give them a short overall evaluation of the present market: who it favors (buyers or sellers), inventory, absorption rate, closing costs, interest rates, types of properties available and the difference between them, and finally the timeline for buying in delineated segments.
I leave them with a written primer that summarizes what I have just said because I find it’s unrealistic to expect them to take it all in on the first try. It’s not long, about 10 pages, but it’s comprehensive and simple to read.
Finding out your buyers’ wishes
Then I move to my buyer’s questionnaire and get as much personal information as I can. The fun begins as we tackle their “wish list.” I get quite specific with questions and note all the answers. I ask them to include everything they can think of, no matter how unrealistic because you just never know.
Questions for first-time homebuyers include:
- How many bedrooms?
- Do they have pets?
- Do they want a high or low floor?
- Exactly how high is high, and how low is low?
- A prewar or a post-war? (which is a New York City-specific question)
- What areas do they wish to live in?
- Do they even know where they want to live?
- What are their deal-breakers?
Other important questions that pertain to New York City: Doormen, washer/dryer, light, view, amenities? Elevator? Free firewood? Mail delivered to the door? I get it all down — and I mean all of it. Because eventually, they must face inevitable compromises.
At that point, they can see what they originally asked for and it doesn’t hurt as much to give a few things up if the wish list is long enough. I usually give them a clean copy that they can refer to as we move forward.
The harder part: financials
Then comes the harder part:
- What is the budget?
- What does their financial profile look like?
- How much income do they have?
- What is their credit score?
- Do they have a banking relationship with a lender?
- Do they have a real estate lawyer?
I give them an electronic copy of a REBNY (Real Estate Board of New York) financial form in Excel format, in which they just plug in the numbers. A lot of agents check out the financials at the beginning, so they don’t waste time on people who haven’t a chance of buying. I don’t mind taking the time and complete it later.
Over the years, I have only had a few bloopers. The rest of them were good buyers, and if they couldn’t buy immediately, they came back when they could. Goodwill always pays dividends.
We spend a lot of time on the financial profile to check their cash flow as well as their assets, and just as important, their debt. Although people think they know how much money they have, it’s not until it’s all down on a spreadsheet that they really find out. Sometimes there is a pleasant surprise, and sometimes some very unpleasant ones.
I like financial forms because the numbers simply are. They are not subjective, and they eliminate emotion. You remove the emotion and can concentrate on the numbers.
Build an extensive database of vendors
When there are problems, a good agent finds options from their database of sources. The better the agent, the bigger their database with sources for everything, including credit repair agencies, lawyers, accountants, lenders and a host of other vendors.
My rule of thumb is to always recommend three in each category so that the customers can choose for themselves. I don’t ever want to be in a position of being blamed for a professional on whom they sour.
The financial profile dictates what they can afford and that, in turn, determines where they can look and what kind of property they can buy. It may be that the reality is different from the expectation, but my job is to show them how to turn that reality into something they can make work and with which they will be happy.
In New York City, maybe that balcony in the two-bedroom on the Upper West Side will be just as much fun as a garden behind the Tribeca loft. Assuming we have wrapped up all the details, they know what they can spend and have selected a lender and an attorney, it’s time to go out and look.