Working with first-time homebuyers requires extra effort to educate, but may offer the biggest rewards for agents
By Megan Craig
With spring in the air, agents are gearing up for their busy season. For some, this means working with first-time homebuyers, preparing them to make the leap into homeownership.
But working with first-time buyers isn’t exactly like working with seasoned buyers—newbies to the real estate scene require more education to help them through the process, says Rich Sands, CRS, REALTOR® and president of Rich Sands Seminars in Aurora, Colorado.
“That’s what makes this a bigger challenge for the agent: The agent comes with a wealth of knowledge, and they’re dealing with people who don’t have a lot of experience,” Sands says. “Agents who work this niche will be ones who like putting the pieces of the puzzle together to give the buyer the best experience they can have.”
Know them and nurture them
When teaching other REALTORS® about working with first-time homebuyers, Sands focuses on a mantra: “They’ve never done this before.”
“Leadership skills are pivotal because as much as a first-time homebuyer needs a real estate agent, they also need a leader,” Sands says. “And that’s because they’ve never done this before.”
That means it’s up to the agent to make the experience informative and enjoyable. Agents should spend a considerable amount of time putting together a profile of a first-time homebuyer based on all the information available about what’s typical of this specific subgroup, Sands says. You have to know what makes them different. “That’s the big question: What do they want and need?” he says. “And more importantly, how can we help them get it?”
Agents also need to do plenty of self-reflection to see if they’re the kind of agent who will match up well with most first-time homebuyers, since newer buyers almost always need more direction than seasoned buyers. And trust is the key to getting these often-younger clients to take your suggestions seriously, Sands says.
“In general, they’re young enough to have access to a lot of information and savvy enough to find it, and that makes them susceptible to believing information about the process that may not be true or completely accurate,” Sands says. “That’s why trust is more important than ever in today’s world.”
Help manage their expectations
Because so much information is available to them, new buyers sometimes come into the process with misconceptions, says Melissa Zavala, CRS, REALTOR® and broker with Broadpoint Properties in the San Diego, California, area.
“Usually, it’s because they’ve talked to somebody unlicensed—a relative or friend—who gives them just one perspective on what happened when they bought,” Zavala says. “It’s up to you [the agent] to clear up misconceptions.”
Shows like those on HGTV have made it harder to bridge the gap between what first-time buyers have come to expect and what they should expect from the process and the experience, says Mark Given, CRS, REALTOR® and author, in Roanoke Rapids, North Carolina.
“People often have a misinterpretation of what buying real property is because they have that TV perspective of how easy it is to buy or upgrade—but in reality, it’s not a 30-minute-episode situation,” Given says. “It’s not that there can’t be a lot of joy in the process, it’s just not the HGTV scenario.”
So, how can agents help set expectations for people who have no idea what to really expect? It comes down to preparation and (again) trust. “Know your market well enough, and you’ll be able to prepare them for the least stressful process possible,” Given says.
It’s all about education
New buyers often don’t know what to expect from the process, but the right agent can take what might be a scary experience and make it exciting, Given says. All it takes is the extra effort to educate the buyer along the way.
This is especially important when it comes to qualifying for a loan. Since this is likely the largest single purchase a new buyer has ever made, they may not fully understand the financial needs for homeownership. “Many buyers don’t qualify and don’t realize they won’t qualify,” Zavala says. “Both parties would be wasting their time if the transaction couldn’t come to fruition in the end.”
But they won’t just be unprepared financially, Given says: “You’re not just selling to them, you’re really counseling them through this experience.”
He suggests asking the buyers what scares them most about buying a home, then taking time to thoughtfully answer every concern. The big difference in working with a first-time buyer and a repeat buyer is that the repeat buyer will tell you exactly the things that didn’t go right the first time, so it’s easier to address issues directly.
“But with new buyers, it’s about asking a lot of questions and doing a lot of listening,” Given says. “You can’t solve their problem until you know what their problem is.”
A Step-by-Step Guide to Educating First-Timers
With first-time buyers, it’s all about education. The homebuying process is new to them and can be overwhelming.
“You have to go back to basics in your explanations for these buyers,” says Melissa Zavala, CRS, and broker with Broadpoint Properties in the San Diego, California, area. “You need to step back and make sure you’re clearly describing the process.” Zavala, who teaches several classes for other CRS Designees, says she finds explaining every step to new buyers right at the beginning of the process intimidates them. Instead, she recommends “careful, measured and deliberate” dissemination of information throughout the buying process.
- Identify what they’re looking to buy. As with many buyers, first-time buyers usually have some idea about what kind of home they’d like. Find out more to help them (and you) decide whether you’re the right agent for them.
- Explain prequalification or preapproval. That way, when the right house comes along, they’ll be ready.
- Tie them in with a lender. You want to be sure the buyer is working with a lender you’re willing to work with, particularly one who closes on time. It’s helpful to explain all the documents needed for this part of the process as well.
- Help them identify neighborhoods. While they’re getting prequalified, do a few drive-by viewings with the buyers, but don’t take them to showings until you’re sure how much house they qualify to buy. Still, you can maintain their interest during the sometimes-long qualification process by discussing where you think they may like to live.
- Set realistic expectations. Because they’re new to the process, first-time buyers may not know what kinds of houses will be within their budget—they sometimes expect a perfectly maintained, remodeled, move-in-ready home for very little money. It’s up to the agent to explain what they’ll actually find within their price range.
- Go shopping. Follow the same process in this step that you would with any buyer, being extra careful to show only homes that fit within the buyer’s budget.
- Explain the contract. Take your time explaining the contract process, since it can seem particularly complicated to new buyers. Contracts differ from state to state, but in general, be sure to define and explain each part, including arbitration, mediation, closing (who pays what), contingencies, loan terms and appraisals. The buyer may not know which parts of the sometimes-confusing legal document are important.
- Make the closing special. Buying a first home is a huge life accomplishment. Consider giving your first-time buyers a small gift—and maybe one that will help them transition to homeownership, like a home repair service.
Ready to go in-depth on working with first-time homebuyers? Take RRC’s course, “First Time Home Buyer Specialist: A Blueprint for Success,” in person or online to learn more and earn credit toward your CRS Designation. For more information, go to CRS.com/learn.
