RISMEDIA, April 29, 2008-While the headlines might appear a bit scary to first-time home buyers, this market actually represents a wonderful opportunity for them to buy homes at value prices. That’s why Gary Keller, founder and chairman of Keller Williams Realty, along with writing partners Dave Jenks and Jay Papasan, wrote Your First Home: The Proven Path to Home Ownership.
Your First Home is an inspirational, how-to guide to homeownership-showing buyers the path from renting to homeownership. And for agents, it can serve as a business-building tool for reaching out to this large segment of the residential market. The authors adapted the following tips from the book to help remind agents to educate their first-time buyers on the fundamentals of our industry.
The Four Fundamental Principles of the Real Estate Buying Process:
The rules of real estate are always local.
Markets change from year to year and from neighborhood to neighborhood. If first-time buyer clients are shopping for a $150,000 home in San Antonio, Texas, remind them that advice based on what the market was like when their parents bought many years ago, or what the market is like in another city, such as Detroit, Michigan, or the $300,000 neighborhood across the river in Windsor, Ontario, doesn’t apply to them at all. Educate clients on the realities of the local market. Help them see they only need to understand what is available within their price range, and only in the local market where they want to buy-nothing more, nothing less.
Similarly, we encourage skepticism toward the simplistic advice-always offer below list price and never look above one’s price range. Adages and absolutes like these can blind potential buyers to the realities of their unique market, a specific property, or personal needs, and can keep them from seizing opportunities. Also, real estate laws, procedures, and practices are local. They vary significantly from province to province, state to state, and city to city. The way a real estate transaction closing is handled for that brother-in-law in California or sister in Kansas may not be the way it’s handled where you’re helping a client buy a home. One of the key things you, their real estate agent, should do is educate them on how real estate transactions are handled in your local area and guide them step by step through the process.
The best deals are usually win-win.
Everything in real estate is negotiable, so educate first-time buyers that they shouldn’t be afraid to ask for what they really want. Still, caution them that negotiations can end when the parties involved become inflexible. Your best bet is to find a win-win outcome that accomplishes what both parties really need. That’s why it’s important to prepare for any real estate negotiation by clarifying with your buyers what they will and won’t be willing to compromise on. In the end, there is always a certain amount of give and take. Hold on to those things your client really wants, and offer up those things that the seller wants and aren’t as important to them. In Chapter 5 of Your First Home we explain to first-time home buyers the process of crafting a competitive offer in which both the buyer’s priorities and the seller’s needs are met. Remind your clients, where there’s a will, there’s a way-a way to a great deal.
Price and value are not the same.
A common mistake occurs when buyers focus on price, not value. This applies to the home your client buys as well as the professionals they use. Being cost conscious is always wise but being value conscious is even wiser. Price and value normally correlate: you usually get what you pay for. But when looking beyond the surface, always be clear about what your buyers want and what matters, and then expect to pay a fair price for these. Just because it’s cheap doesn’t make it a bargain. Help them think of buying a home as a search for value.
We also want buyers to think of value as quality at a reasonable price. Just as they seek out value in a home, it is important to also look for value from the professionals they hire to serve them. After all, this is more than likely one of the biggest purchases of their lives and is no time to cut corners. That half-price inspector may save them $200 today but could miss a structural problem that costs thousands tomorrow. They should be able to count on their lender to lock in the best rate and deliver all necessary paperwork by closing. If a discount lender drops the ball, closing could be delayed, it could cost considerably more money, or it might possibly even cause your clients to lose the home.
Refer your clients to vendors and partners that you’ve dealt with in the past and you trust. Remind them that integrity, reliability, and impeccable service should be expected. This principle has always been true and will always be true: you get what you pay for.
First-time home buyers should choose with their heart and their head.
Whatever property your clients buy will be both a home and a major financial investment. Your job is to help them find a home they absolutely love. A home that seems to fit their life located in a neighborhood that just feels right. At the same time, the property should be a solid financial asset-one that is structurally sound and appears to be well-positioned to appreciate in the future. In the end, finding that perfect place means balancing emotion and rationality. When helping first-time buyers look for their future home, allow them to let their hearts guide them. But when it’s time to buy, help them step back and think with a cool head. In a few years, when they want to sell the house, they will be thankful you did.
For more information, visit http://www.millionairesystems.com/msys/YFH.html.
