First-time buyers aren’t always easy to work with, and convincing them to buy as property prices and interest rates rise is an added challenge. Still, buyer’s agents can help these clients overcome obstacles to homeownership.
How?
To start, buyer’s agents must stop focusing on surface problems if they want more of these clients to make it to closing. Instead, they should address the underlying issue – first-time buyers are often reliant on information that’s limited, outdated, or entirely incorrect.
Convince more first-time buyers to purchase a home this year by offering the following information.
Interest Rates Are Still Relatively Low for First-Time Buyers
While it’s true that interest rates are higher now than they were when the housing market hit rock bottom, they’re still relatively low. In fact, when compared to rates in the ‘80s and ‘90s, they’re actually quite good.
This FreddieMac Chart shows that 2017’s annual average for a traditional 30-year mortgage was 3.99 percent. If you scroll down, you’ll see that the annual average 10 years prior was 6.34 percent. 20 years ago, this rate was even higher.
So, if your first-time buyers don’t want to buy because interest rates have gone up slightly in the last few years, help them understand how good current rates are. Also, you should share that top economists predict rates to rise higher in the near future.
Home Prices Will Likely Continue to Rise
In most real estate markets around the country, one thing is clear – home prices are rising. If your first-time buyers won’t buy until prices drop, there’s no telling how long they’ll be waiting. Thanks to the ongoing inventory shortage, home prices are expected to increase through 2018 and beyond.
Once your buyers understand that this seller’s market could continue for some time, show them how much money they’ll be wasting on rent if they keep waiting. Create comparisons between their current rental arrangement and what their monthly mortgage payment would be on a local listing to show that homeownership makes more financial sense.
First-Time Buyers’ Hurdles to Homeownership Can Be Overcome
Buying a home can be a challenge with obstacles like poor credit and closing costs to overcome. However, these obstacles aren’t as insurmountable as many first-time buyers think, especially with the help of a good buyer’s agent.
When it comes to the poor-credit-score problem, it turns out that it’s not really as much of a problem as people make it out to be. According to the FHA’s Annual Management Report for 2017, this year’s average credit score for an FHA borrower decreased from last year’s to 676.
Help your first-time buyers better understand their options by, at a minimum, explaining what some of these options are. To be of even greater service to these clients, and to increase the likelihood of them making it to closing, put them in touch with a mortgage professional who can go over the fine details with them.
When you encounter first-time buyers who still aren’t sure that this is the year to purchase a home, cover the information we touched on in this article. By the time you’re done, they should understand that purchasing a home now isn’t just a possibility, it’s an excellent idea.
Pat Hiban is the author of NYT best selling book “6 steps to 7 figures – A Real Estate Professional’s Guide to Building Wealth and Creating Your Destiny”, founder of Rebus University and the host of Pat Hiban Interviews Real Estate Rockstars an Agent to Agent Real Estate Radio Podcast with Hiban Digital in Baltimore, Maryland. Follow him on Facebook or Twitter.
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