Working With First-Time Buyers
The market for first-time home buyers is getting hot again. Millennials are moving out of their homes and rental costs are going up, which means that many are poised to purchase as their next step. Minorities and single women are segments that are accounting for most of the growth within this sector.
Whether you are a real estate agent, insurance agent, tax professional, loan officer or other professional, it is hard not to be effected by this market. Quite the contrary, many are stepping up to focus upon this segment of the market. This is not a short-term gold rush. Even in a “normal” market, first-time buyers typically comprise close to 40% of the purchase market.
It is not enough to say that you are going to focus upon this segment of the market. Those who are going to service renters must understand that these people have special needs. The home-buying experience will be their most significant financial transaction and it is important for the experience to be a positive one instead of a nightmare.
What are these needs? They need someone to learn from. That means you should not focus upon this market unless you are an expert. You should anticipate the questions they have and be ready for answers. As a matter of fact, it would be a great idea to provide them with a sheet of frequently asked questions (FAQs) in your area of expertise. There is so much information being thrown at these people that they are not likely to remember what you tell them. Don’t limit this information to FAQ’s. Also include printed information about the process–including graphs that demonstrate the flow.
You must think of yourself as a teacher as well as a business person. When they see you as a teacher rather than someone trying to sell them something, they are more likely to listen to your advice. How many times have transactions gone awry because people went off in the wrong direction because there was not enough of a level of trust? People trust teachers.
One characteristic of a teacher is someone who has loads of patience. Expect that questions will be asked two and three times. Expect your clients to not always follow-through the way you would like. All through these bumps and bruises, you will need to exercise an extraordinary amount of patience. You are not their parent. You cannot get angry with them. You are their teacher.
Help them prepare. You have heard this saying many times before: An ounce of prevention is worth a pound of cure. Nowhere is this saying more appropriate than with regard to the home purchase process. For example, having them spend time with a loan officer getting a pre-approval will not only give them more confidence to purchase, it will remove a significant amount of stress from the process. Questions will be answered, issues will be resolved and now the search can occur with a focus on the goal of finding the right home instead of two processes that are occurring at once.
During the process, do not assume that the clients understand what you are saying at all times. Do not use technical language that may be common to your profession but foreign to them. For example, when you speak about rates going up and down, do not assume that the clients know exactly how that affects their payments. They are even more likely not to know how rates moving may affect their payments after the tax factor is figured into the equation. They might not even understand what the mortgage payment is comprised of and other areas they will be responsible for such as home maintenance.
If you are an expert in your industry, you must also align yourself with other experts. The first-time buyers will be looking for recommendations. Going back to the tax issue, they may want to talk to a tax professional who also may be able to help them file forms to take advantage of the tax credit if the state and/or federal government is offering one for which they qualify. Referrals of other professionals removes more stress from the transaction because once again, they can focus on the purchase instead of shopping for all of the services associated with the transaction.
In addition, referring them to other experts also makes it more likely they will experience a smoother transaction. On their own they are more likely to obtain the wrong information or hook up with service providers who don’t provide the best customer service. Referring experts such as yourself with good service records should be the least you can contribute to the transaction.
Of course, these referral relationships should go both ways and these high-level relationships should increase your business in the long run. A strong referral starts you out in a position of trust which again is imperative if you are going to lead first time buyers through a successful and stress-free transaction.