Things You Should Know About First-Time Homebuyers
As the eldest faction of Gen Z joins Millennials as first-time homebuyers, more real estate agents have made this demographic their niche. If you’re a realtor, consider the following list of things to know about first-time homebuyers so your marketing efforts pay off.
Age, Experience Level, and Preparedness
Most first-time homebuyers are relatively young and are therefore easily overwhelmed by the steps involved with financing, submitting offers, and completing closing paperwork.
If you are enthusiastic about being a perpetual real estate educator who works with clients requiring extra coaching, working with first-time homebuyers will suit you well. You’ll want to soothe their nerves, answer their long list of questions, and ultimately earn their trust and gratitude.
Financial Preparations
Before a seller will consider an offer from them, your client must be preapproved for a loan. As an agent to first-time homebuyers, you’ll need to help them understand how this process works, and educate them on the distinction between being prequalified and preapproved.
You will also discuss the pros and cons of offering a significant down payment, using 3.5% FHA loans, and withdrawing penalty-free lump sums from an existing IRA.
Be up-front about closing costs, as well, and explain that expenses won’t end here. Property taxes, moving costs, maintenance bills, and mortgage payments can pile on quickly, overwhelming the budgetary capacity of younger buyers. Your job includes the responsibility of ensuring that your client has a complete picture of the true financial impact of home ownership.
Credit Complications
If you encounter a potential client who is eager to purchase a home but has preexisting credit issues that will preclude them from the market, take the time to help them understand how to improve their credit scores quickly.
You may also wish to establish a reciprocal referral agreement with a local reputable credit improvement service or credit repair attorney. By sharing clients, you can send them motivated customers, and they can send you buyers who have already improved their credit rating.
What to Expect During Negotiations
When you work with first-time homebuyers, you will likely find that they are relatively flexible with respect to negotiations and are more amenable to following your advice.
As a result, once you have invested your time and built trust with your clients, you’ll have the satisfying experience of helping them succeed in their negotiations.
Single-Family Homes
The overwhelming majority (nearly 75%) of first-time homebuyers are searching for single-family homes. Therefore, they may be poorly-suited to you if much of your experience has been with condominiums, townhomes, or unconventional homes.
Specialized Loans
First-time homebuyers, and those who have not owned a home for at least three years, are eligible for specific loan programs. Therefore, you will want to be well-versed in all that apply in Middle Tennessee. Be prepared to explain VA loans, FHA loans, fixed-rate mortgages, and adjustable-rate mortgages, because many of your clients will not be clear on the pros and cons of each.
Applicable Tax Breaks
First-time homebuyers are eligible for property tax deductions, mortgage interest deductions, and capital gains exemptions. As their real estate agent, it will be to your benefit to ensure each of your clients is aware of these benefits. Ultimately, these selling points may be just the nudge your clients need to make the leap into home ownership.
Marketing Strategies
As a rule, Gen Z and Millennials are looking for real estate agents and properties online. Therefore, we suggest establishing a website advertising your services specifically for first-time homebuyers.
Additionally, focusing heavily on social media interactions and content marketing with targeted keywords will bump you to the top of Google results, ensuring that your market will encounter your services from the word go.
For further assistance with online marketing, consider hiring a digital marketing specialist. Look for a marketer who can demonstrate positive results for other real estate agents; as we’ve noted, this is a niche market, and therefore specific marketing strategies must be employed.
Deliver Concrete Added Value
When you interact with your clients, it’s crucial that you quickly establish that your knowledge of Middle Tennessee real estate, especially directly in your client’s intended purchasing area, is far more valuable than anything they could independently locate online.
The younger generations are used to turning to the internet to find experts. However, there’s one thing they love even more: feeling tapped in to special knowledge that their peers cannot access. Leverage this dynamic, and you’ll have their full attention.
Demonstrate that you have done, and will do, the legwork for them, sifting through available properties, and assisting them with placing competitive offers as quickly as possible. After all, without your help, they aren’t likely to succeed against buyers who have opted to work with an experienced agent, especially those who aren’t buying their first home.
A knowledgeable, kind, confident agent like you can create a life-long impact on a first-time buyer. As a result, you may experience a wave of referrals from each client you impress. Keep this in mind if you experience exhaustion holding a client’s hand; by staying focused on why you do what you do, you’ll naturally be better equipped to stay on top of your game at each stage of the journey.