With fewer deals to go around, many markets experiencing a downshift and more agents than ever, it makes business sense to reach for the fundamentals. That’s why at Inman, we’re going Back to Basics with curated throwbacks to some of our most-read stories as well as new insights from agents in the field — all culminating in Inman’s Playbook for the Fall Market, a two-day virtual event that you should make plans to attend.
According to NAR research, first-time homebuyers made up 34 percent of all homebuyers in 2021, an increase of 3 percentage points from the previous year. As the market continues to shift, would-be homeowners who have been locked out of the red-hot real estate world for the past few years are starting to find opportunities.
Amid these changing tides, first-time buyers need a trusted guide more than ever before. Here are four tips for helping first-time buyers become proud homeowners.
Give first-time homebuyers a road map
First-time experiences can be exciting — but they can also be nerve-racking because we don’t know what comes next. As a real estate expert, one of the biggest gifts you can give your clients is knowledge about the homebuying process. You may have done this hundreds or thousands of times, but this is their first time. Let them know what the road ahead looks like. The step-by-step process of purchasing a home doesn’t really change in different markets. But when markets cool or heat up, the speed at which you and your clients need to move can change. When you’re discussing the road ahead with first-time buyers, be sure to let them know what they can expect.
Understand what they need and what would be nice to have
Helping buyers get a clear understanding of what they’re looking for is a win-win. Some hopeful homeowners may have expectations that just don’t match the inventory available in your market – and even if it is available, it may not be within their price range.
Even if the market is showing signs of slowing appreciation rates, the latest Federal Housing Finance Agency House Price Index shows that housing prices are still up 1.4 percent over the last month and up 18.3 percent from last year. This means that if you find a deal, you want your clients to be able to move fast.
We’d also encourage you to really discuss your buyers’ needs with them. Many people only think about homeownership as a stand-alone house (and maybe a picket fence). However, the reality is there are tons of different options available – townhouses, duplexes, condos – and more. All these options generally have a lower price point in addition to shared amenities and other perks.
Getting really clear with your clients about what it is they are looking for will not only save you from showing more homes than you need, but it will help buyers quickly identify when they find a home that matches their criteria and lets them know they should make an offer.
Communicate clearly and often
When buyers start to get reluctant, it’s often because they are losing confidence. To help them feel secure, you need to stay in contact – even after an offer has been accepted. Up until closing day (and hopefully long after), you are still the buyer’s agent.
The best communication is proactive. This means that you need to anticipate both the emotional state and tactical needs of your buyers. Can you prepare them for reading and understanding their inspection? Are you checking in with them as you wait for closing day and letting them know what they need to bring to the table?
Keeping in touch with your clients throughout the entire transaction ensures that you’ll be able to advise them through any uncertainties.
Educate about more financing options
Among the biggest hurdles to homeownership, surveys have shown, are the amount needed for a down payment as well as concerns about affordability. Being able to advise your clients to ask about less-typical financing options with their lender may make all the difference.
The U.S. Department of Housing and Urban Development not only has federal programs that can benefit first-time buyers, like FHA loans, but most states have additional funding aids that your clients could apply for. Additional opportunities exist for first responders, veterans, and other communities.
As interest rates continue to rise, high prices aren’t the only difficult component of affordability. The increasing popularity of adjustable-rate mortgages (ARMs) is no accident.
A market shift can be a time of remarkable opportunity — both for your business and for buyers and sellers. Keep these four tips in mind as you help people who are eager to enter the market they may have previously been locked out of. You’ll set yourself up for success during this shift, and you’ll gain clients for life.
April Murphy is the Director of Publishing at Keller Williams Realty, Inc. She and her team research and collaborate with Gary Keller and Jay Papasan on their bestselling books. Their next book, a revised and expanded edition of the homebuying guide Your First Home, releases in September 2022.