Real Estate News … According to Real People
Sorting through real estate news articles can often be like thumbing a tabloid: this celebrity bought that $7M home, these four pieces of unattainable technology will turn your house into a Smart Home, and the most expensive streets in America. You know, the usual.
And thus, simple questions from first-time buyers are going unanswered. So, one survey and an open forum later, and UHL is ready to compile a real estate article to help both professionals and buyers better relate to common concerns.
Questions and Answers: First-Time Buyers
We took to the streets … er, social media… to ask: What are the most important questions you have or had when buying your first home? Responses came from both potential buyers, recent 1st-time owners, and a surprising number of long-time owners, eager to recount things they wished they knew before buying their first home.
Where Did you Start?
The most common start of our respondents’ quest was, by far, Googling, “Houses for sale in my area.” The majority reported a maximum timeframe of 6 months between the first Google search to teaming with a realtor. Of particular interest (to this writer at least), is that not a single one suggested they started their search with an affordability calculator or the like. The most financially-oriented consideration early in the process was taxes. For example, Googling “Houses for sale in […] County,” knowing that taxes in some counties are lower than others.
The implication for real estate professionals is that buyers want to get going before they know what they can afford. Unsurprisingly, when asked whether respondents received a pre-approval before or after searching, each one said after. By getting that pre-approval done right away- or at least checking out an affordability calculator– the process is going to go much more smoothly. For everyone. Take, for example, this spot-on quote:
So when I saw Zillow estimating payments at $700. COOL. Little did I know that was 20% down and low interest rates.
Uh-oh. It has to be a little hard to get excited about seeing 3-bedroom homes when you thought you could afford 4.
What Did You Want to Know?
We asked respondents to share their sources of constant confusion. Which part of the buying process was shrouded in mystery until the step was right in front of you? Out of four choices, only two received all the votes. (1) How do you know what mortgage type to choose/How does a mortgage work? (2) What is closing day like? What do I bring and what’s going to happen?
How Does a Mortgage Work?
When asked who made the buyer feel most comfortable in the financials of their decision (friend/family, myself, realtor, or mortgage banker), responses were split evenly across the board. The conclusion to be drawn? Buyers need to be exposed to each party in the buying process before finding out whose advice and wisdom will provide the greatest help. Furthermore, the earlier the buyer is exposed, the better. Because we all know that nerves can be a large distraction in the buying process.
Here is an example. One respondent noted she and her husband worked solely with a realtor until a point at which they were so nervous about the financial, they considered quitting their search. Finally, they were introduced to a mortgage banker. He came in as a huge relief in helping them understand how and why they could afford the house. A home was eventually bought. Now, on the other hand, it may be much simpler. One respondent said it came down to comparing himself with a friend, “If they could do it, I knew I’d have no problem.”
Interestingly, few people expanded upon how they ultimately knew which loan type to choose. As real estate professionals, we know buyers often go with the recommendation of their mortgage banker. This may be why it was glossed over; sort of a one-and-done decision. For this reason, we at UHL take pride in buyer education. Because, after all, if someone is becoming a homeowner for life, we want them to understand why certain loan types work for certain situations. And no real estate news article is going to be able to cover that for each unique buying situation.
What is Closing Day Like?
Perhaps my favorite quote of all was this: “How many pens should I bring as I sign my life away?” Closing day was understandably perceived as the big mysterious end to a nerve-wracking process. Buyers reported being unsure of what actually happens once they reach the table.
Honestly, it is hard to say that any real estate article could satisfactorily clarify this for buyers. Yes, you can describe that it is as simple as signing papers. The amount to be brought in the form of a cashier’s check can be repeated. But can you ever truly tell a first-time buyer that they have all the information they need? It sure doesn’t feel like that when you’re making your first real estate investment.
You Wish a Real Estate News Article Could’ve Told You…
In a forum-like setting, we asked people to share that one thing they wanted to know when buying their first home. The bullet points below reflect answers from both potential homeowners and the long-time “I wish I knew…” homeowners.
- What kind of house do you want? Did you take time to compare how living in a condo, townhouse, or single-family home fits your lifestyle? If you always pictured yourself in a historical home, were you able to research what the maintenance would look like?
- What to look for in a starter versus permanent home? To a mortgage banker, this is especially important because their 5-10 year outlook is going to factor into choosing the best loan type.
- Where do I find water tables? This seemed to be very important to people as it was the most popular response. One homeowner recommended buyers call the Army Corps of Engineers for a survey. He was glad he did as the house he purchased was on the high side of a subdivision. He later found out the lower half was dubbed “sump pump row.”
- How is the HOA going to affect me? Another highly popular response. It seemed as if respondents heard one HOA horror story too many and thus avoided them at all costs. Knowing the particular functions of the HOA within their prospective neighborhood could change their mind. Afterall, few HOAs are the kind that go around telling you that your grass is too tall and your mailbox is too big.
- What is a good ratio of renters to owners in the neighborhood? This is a great question which I imagine is often overlooked by first-timers. The risk of living among a high percentage of renters is living in a neighborhood of houses that are not taken care of as well as owners otherwise would. And if you’re the neighborly type, you could be risking living among a revolving cycle of neighbors.
What Does it All Mean?
The purpose of our research project was to find out what “real people” want to know. From this, we can draw a few conclusions. First, every member of the real estate team should work closely with a buyer to find out what information this particular buyer values most. Moreover, you can never introduce each member of the team too early in the process. Secondly, hearing what homeowners wished they knew can help any real estate professional achieve the client-for-life goal. How many of those “I wish I knew…” is perceived as “I wish my realtor/mortgage banker told me…”? In short, we can always afford to know more, because, after all, we are helping people land one of their biggest life milestones.