First Time Home Buyers Myths
Tuesday, May 11th, 2010
Myth # 1
All real estate agents are the same.
Many buyers think that anyone who holds a real estate license is equally capable of assisting them in buying a home. But I would ask them, “Does everyone with a driver’s license operate a vehicle the same way?” Of course not. Both drivers and real estate agents are licensed by both their state. But just as drivers approach the road differently, so can real estate licensees vary considerably in how they approach their job.
In a similar vein, real estate designations indicate that an agent has completed advanced training, which is usually a sign of higher competence. After all, would you rather hire an accountant or a certified accountant? Still, designations don’t necessarily guarantee a higher level of service.
To by truly successful in this business, we all need to remain committed to personal growth and skill development. That effort includes designations but is also involves something more- an eagerness to constantly find ways to raise the bar. So if buyers, want to avoid the risks involved in believing that we’re all the same, they should take the same advice that most sellers employ- interview as least three agents before you make an informed decision about who you want to work with.
Myth # 2
The agent on the For Sale Sign will look out for my interests.
You would think that all the changes in agency disclosure laws over the years would have altered the way consumers approach buying a home. But in my experience, most buyers, and especially first-buyers, still don’t understand that concept of representation and mistakenly believe that a listing agent will watch out for their interests. Unfortunately, buyers are still more likely to shop for homes rather than shop for an agent who will assist them in finding a home.
I’ve tried to help dispel this myth with my advertising campaigns targeting buyers. Most of us would agree that it’s very challenging to prospect for buyers. But I believe that in order to reach them, my ads can’t just promote my listings; my ads need to promote me. One campaign I run uses this theme: “Don’t call on sings. Don’t’ call on ads. Call on Randy.” My marketing message goes on to explain what, specifically, I offer buyers.
But to really connect with buyers, you need to be very clear about your own unique value proposition, and be able to convey this very quickly. Are you going to tell buyers about your great negotiating skills? Your diligence in finding every prospective home? Or your unsurpassed knowledge of your market? Whatever it is, you need to pinpoint and refine your message to buyers and include it in all your communications directed towards them.
Myth # 3
I can find all properties for sale on my own.
As more and more first-time buyers search for and preview properties online, the myth has grown that they can find every property they may be interested in on their own. But not all available properties are advertised, or have a sign. Overnight updates too many online listing sites can lag real-time developments, particularly during hot markets. Buyers don’t really understand how the real estate listings work, nor are they plugged into their local real estate markets to the extent that agents are.
Myth # 4
If I just wait long enough, I’ll find the perfect home.
There is no such thing as a “perfect” home. Buying a house requires compromises, a big dose of reality, and an awareness of market conditions. But first-time buyers, in particular, don’t always understand this. They’re more focused on the enormity of the decision- they’ve never made such a substantial purchase before and they really want to get it right. On top of this, if the real estate market is slow in your area, I’ll venture a guess that you’re seeing even more foot-dragging with first-time buyers.
But I also recognize that many good buyer-clients simply need time to make a decision. (I think of them as “wait-watchers”) I always make a point of asking buyers how they want to proceed. Do they want to do all the watching, letting me step in to help them get the home after they’ve identified one? Or do they prefer that I do all the looking, letting them know if something comes up? Discussing and clarifying clients’ preferences in your/their role can go a long way towards managing expectations and helping you adapt your services to satisfy a wider variety of clients.
Myth # 5
I’ll improve the odds of finding the house I want if I work with more than one agent.
First-time buyers, eager to canvass a market for all possible homes and (again) not really under-standing buyer-representation, can mistakenly rationalize that they might as well have several different real estate agents searching for them. Before you know it, a buyer ends up seeing the same house with two different agents, creating, confusion over who is doing what for the buyer and who earns cooperative compensation.
Of course, this possible scenario could be completely avoided if we asked, up front, if a buyer is working with anyone else- and if we explained buyer-representation to buyers, so everyone was clear about who was working together, and how. This is why buyer’s reps are encouraged to get a signed representation agreement with their clients. And as standard of Practice 16-9 of the REALTOR® Code of Ethics instructs, we have an affirmative obligation to make reasonable efforts to determine whether the prospect is subject to a current, valid exclusive agreement to provide the same type of real estate service. So eliminating this myth among buyers may be as simple as following our own guidance.
Myth # 6
Buying a house is a simple as agreeing on a price and signing a few papers.
If only I were that simple! However, first-time buyers don’t always appreciate that purchasing negotiations can involve many other issues, beyond price. Nor do buyers realize how many other steps are part of the purchase process after the contract is signed including loan approvals, appraisal, title search, home inspection, etc. Helping a buyer move a transaction successfully from contract to closing takes a lot of effort!
This is anther area where I think it’s vitally important for buyer’s representatives to manage their client’s expectations; including explaining how each step will be handled to finalize their purchase. Are you planning to baby-sit the transaction all the way to closing? Or do you have other people on your team who will help guide the buyer? Regardless of how you assist clients with their transactions, buyers need to know what to expect right up front, so they don’t encounter any unpleasant surprises. To earn their long term loyalty (and referrals), keep them informed- and satisfied- until they’ve settled into their new home, and beyond.
Myth # 7
Foreclosures offer the best deal.
With so many more foreclosures taking place, and so much media attention focused upon them, it’s not surprising that many buyers assume that foreclosures are a good deal. But the fact is, some are overpriced. And some have undesirable conditions attached to them. I always tell buyers that when it comes to foreclosures, what you see is what you get-and what you don’t see is also what you get.
Still, foreclosure properties represent a growing segment that many buyers’ representatives don’t fully understand. To determine whether or not a foreclosure truly offers a good value required considerable research and due diligence
Myth # 8
Getting a mortgage should be quick and easy.
Many first-time buyers question and resent the whole lending process. Then ask, “Why do I need to provide that?” and “Why do I need to jump through all these hoops?” In my experience, their resentment has less to do with thinking they’re entitled to a mortgage, and is more about feeling annoyed and impatient.
Again, we can help smooth the process by explaining that, especially in the recently-turbulent mortgage market, lenders need to take important precautions before extending credit. Even if your buyer is seeking a loan from a bank where they’ve been a long-time customer, the fact remains that their mortgage will very likely be sold off in the secondary market to an investor who doesn’t know them, but expects to see complete documentation on creditworthiness.
Myth # 9
All mortgages are essentially the same.
Given all the recent attention on borrowers who are struggling to live with ballooning adjustable-rate mortgages, you’d think that more first-time buyers would be attuned to the notion that mortgages are not all alike. Perhaps it’s more important than ever for buyer’s representatives to help them understand the complexities in choosing a mortgage.
The key questions are: How does one rate compare- to another over the long haul? How long will you be in your home? What are you long-term investment goals? Does a 15-year versus 30- year program measure up against your goals? Does an adjustable rate mortgage make sense, and if so, what’s the best time frame? First-time buyers often don’t look at enough options before they buy. IN assuming that all mortgages are the same, they deprive themselves of making a fully-informed decision.
Call me today at (704)840-4137 to talk more about this.
