New Realtor Guide: How to Sell to First Time Home Buyers
You’ve been hard at work, and now you have some great leads to follow up with! You already know that your selling technique depends on the needs of the person you’re talking to. For first time home buyers, education is a large component of the value you will provide.
As individuals go ahead with one of the largest purchases of their lives, they are going to need some extra reassurance and knowledge from you - their Realtor, to successfully conclude the transaction.
Your Role As A Real Estate Agent or Realtor
Be ready to explain how you fit in to the home-buying journey, how you will help, whether you specialize in a neighborhood and price range, and anything else that sets you apart from other Realtors in your area.
Be up-front and transparent about how and when you get paid, whether you work within a brokerage or individually, what a buyer’s contract is, and the steps you will take to assist your clients successfully purchase their first home.
Pre-qualified vs. Pre-approved
Buyers may contact you before they have a pre-approval in place. If that’s the case, don’t just push them off the phone until they have an approval in place. Instead, invest a few minutes doing the following:
Go over market stats in your neighbourhood.
Explain that a pre-qualification is a preliminary mortgage estimate, whereas a pre-approval locks in an interest rate for a period of time, and is based on an in-depth evaluation of their financial situation.
Offer to provide the contact information of mortgage brokers who can assist them.
Ask them to follow-up with you once they have been pre-approved to schedule a Buyer’s Consultation.
Schedule a follow-up e-mail for the following week to check in on how the pre-approval process is going (or if you use RealOffice360, you can customize your action list to have this auto-populated for each lead that comes in).
Depending on the economic situation in your area, it may be appropriate to also let buyers know that a pre-approval does not mean their mortgage is guaranteed. For instance, if for any reason their down payment falls short, or their employment status changes drastically, they may not be able to successfully obtain a mortgage.
Type of Market in Your Area
In some regions, houses are selling at significantly over asking price and buyers are going so far as to waive inspections to win out against other offers. In other areas, homes spend a significant amount of time on the market prior to being sold.
Each scenario represents a different set of strategies that buyers will need to prepare for. As their Realtor, it is helpful to explain what the market in your area has been like for buyers, and lay out examples from past sales (your own, or if you have yet to make a sale – those of your colleagues).
Who’s involved?
An easy transition to this topic is when questions of finances come up. Ask: is anyone helping with the down payment – and if so, are they going to be coming along to the open houses? Do they want final say in the home purchase decision? Is their financial support contingent on anything?
If a parent of other party will be involved, talk to them as early as you can in the process to understand what attributes of a home they value. You can then check with your client to see if they’re on the same page, and adjust your search parameters accordingly.
Pre-conceived Notions
Speaking of parents, first time home buyers may find themselves at the receiving end of a deluge of advice. Unfortunately, not all of what they’re told will be accurate, or even apply to their situation.
Pay special attention to any areas of hesitation, and be sure to invite questions every step of the way. If you find yourself needing to educate your client about what others have told them – tread carefully. A good conversational trick to employ here is to acknowledge the advice they received, explain the context it is true in, and how things have changed.
Current & Future Needs
Start by getting a list of “must-haves” and “nice-to-haves” from your client. Beyond this, encourage them to share their five or ten year plan with you. Do the things are their must-have lists match up with this? As their real estate agent, use your expertise to provide input on home features or even additional neighbourhoods in their price range to consider.
Beyond The Offer
Many finance blogs talk about saving a percentage of your down payment for closing costs, but you may need to spend some time clarifying what the process after submitting an offer is, and how long it can take.
Unlike most other purchases in modern life, there is a significant lag in time between making the decision to purchase, and taking possession of a home. What’s more…you could decide to make the purchase, and not get to! This uncertainty and gap in time can fill first time home buyers in particular with angst.
Reiterate the buying strategy you laid out to your buyer when you discussed current market conditions with them. You may also need to explain what each item that qualifies as a “closing cost” means. This includes paying for home inspections, attorneys, land transfer and other taxes.
Be prepared to describe the roles of different professionals, the value they provide, the average cost of these services in your area, and provide referrals.
Final Thoughts
Purchasing real estate is daunting for most people, all the more so if it’s your client’s first time buying a home.
As a Realtor, you have a significant opportunity to boost your buyers’ knowledge and confidence as they go through this exciting and nerve-wracking time. Be especially patient with this segment of your book of business.
Don’t assume anything, and be sure that you know who all of the decision-makers are. This process does entail some extra legwork on your part, but you can use the auto-populated action lists in RealOffice360 to make that a seamless part of your day.
Between marketing your business, juggling showings, and staying on top of your leads, you need a system to manage your workload in a stress-free and intuitive way. RealOffice360 is an unbelievably simple CRM, business tracker, and daily planner for real estate agents and Realtors®. Rather being just a data dump for client information, RealOffice360 helps you visually build your business plan, cultivate your real estate database towards your goals, and ultimately keeps you focused on what matters most: your clients and your deals. Get started for free - no credit card required!