The act of buying a new home is no easy task, and it can often become a long, drawn out and convoluted process with so many steps to take and relationships to be made.
As a real estate professional, it’s your job to make this process easier and to set clients on the path of least resistance with minimal missteps. Here are some tips on how to pave the way and help prevent your clients from common homebuying mistakes.
Common Mistakes and How to Fix Them
So where do real estate professionals witness the most errors?
“The most common mistakes I see with new homebuyers is that constant war of expectation versus budget,” says Christian Ross, managing broker at Village Realty in Atlanta, Ga. “Especially when it comes to new-construction homes, buyers sometimes feel as though the seller owes them something. They don’t.”
When demand is high, sellers can be selective with what they offer. In the case of newly built homes, builders set a price that won’t be negotiated to help protect the home prices in the area (however, an experienced real estate professional knows that what can be negotiated in some cases are closing costs and upgrade and options packages. To prepare clients, Ross urges buyers to look at homes that fit within a smartly set budget; that way they can easily identify a great deal for them.
It’s also best to advise clients to be realistic with their expectations. “Looking at houses way out of your price range is just asking for trouble,” says Michelle Stansbury, a Realtor with The Kentucky Life in Lexington, Ky.
Another area where many mistakes are made involves relationships with the lender or getting pre-qualified in the first place.
“They want to see homes they think they can afford and are often disappointed when they are unable to buy or do not qualify to buy the home they just fell in love with,” says John Murray, president of Phoenix, Ariz.-based Realty Pilot, a real estate industry software provider.
“Choosing a lender that your real estate agent doesn’t recommend can be a big mistake,” says Stansbury. “An experienced lender can make the difference between closing on time or not closing three weeks past the agreed upon date.”
Ross says another big mistake she sees is clients don’t realize that “he who has the gold makes the rules,” meaning the lender has specific guidelines in order to approve a loan and that buyers must be open with all of their financial income and debt.
“Many buyers become very upset at the questions lenders ask,” says Ross. “I always ask my clients, ‘If someone wants to borrow $300,000 from you, what would you ask for?’ It allows them to put themselves in the lender’s shoes and to understand that when you’re buying a home, financial credibility is paramount.”
And, of course, send any financial documents and requested materials to the lender as soon as possible. “The longer they wait, the more it gets pushed to the bottom of the pack,” says Ross.
A third common mistake clients tend to make involves relying too much on information from the Internet and gaining a false sense of home values, instead of trusting a Realtor.
“This can be a real disservice if over- or understated values are expected,” says Murray. “Because Realtors live and work in specific areas, they know the subtleties of a market that are not easily represented online or easily calculated by an automated value.”
Realtor to Realtor
Realtors Ross and Stansbury say there a few more things you can do to help steer your clients clear of making mistakes along the way. One of those is to research your local market. Knowing, for example, how the resale market will affect clients is important in helping home shoppers who may not have considered new homes to check out new-construction as an option.
“Know how many months of inventory are on the market, how likely it will be that your buyers will end up in a multiple-offer situation, and how much they can expect to get off the price of a house,” says Stansbury.
Ross agrees, adding that Realtors can check the local Chamber of Commerce for recent business openings and closings, school enrollment figures and more within the area.
“Know how to explain the purchasing process from start to finish and the value you bring to the table,” suggests Stansbury. “Realtors should also be familiar with different loan programs and lenders so they can equip buyers with the help that they need.”
Ultimately, providing your clients with what they need should be your main concern.
“A Realtor can prepare themselves by understanding the client’s goals and the areas that are of importance to them,” says Ross. “Listening is the single most important thing you can do for a client. … The more you know, the more knowledge you have to create a facts-based versus emotions-based conversation.”
Once you build that trust and get to know your client, guiding them down the right path to their new home will be much easier.
“Remember, who finds the home is only the start of the journey,” says Ross. “It is navigating through the largest transaction that the expertise of a knowledgeable Realtor really shines through.”
Drew Knight is a freelance writer for Builders Digital Experience (BDX). He graduated from Texas A&M University in December 2014 with a degree in agricultural communications and journalism.
He previously edited and designed pages for the Bryan-College Station (Texas) city paper The Eagle, wrote for the Brazos Valley’s premier arts and entertainment publication Maroon Weekly and worked in publicity at Warner Bros. Records in New York City.