Every homebuyer is different, just as every home buying experience is different. Each of your clients will have their own set of likes and dislikes. As a real estate professional, you should know how to tailor your approaches and strategies to suit your client’s wishes. Categorizing your client based on their motivations for buying is one of the best ways to help them find their dream home. Read on for more information on the categories of homebuyers.
First-time homebuyers are usually younger, more inexperienced buyers. They may start out with unrealistic expectations and end up going through a long search before they get a true sense of the market, a concept of what they can afford, and an understanding that the homes within their budget may not be perfect. First-time homebuyers often need more coaching than others, therefore, market education is a great way to start. For example:
Let the buyers know what has recently sold in their market area and price range.
Prepare your buyer to have an unsuccessful first offer.
Make sure buyers use common sense, rather than emotions.
Try to keep the drama to a minimum and be the buffer between buyer and seller.
Explain the importance of being pre-approved for a mortgage from the seller’s perspective.
Buyers Looking To Upgrade
These buyers often have growing families or growing incomes and expect higher quality and more space. Though these buyers may be more realistic in their expectations than first-time homebuyers, they may also get stuck looking for their “dream” home and become unwilling to compromise. These buyers won’t need as much coaching as first-time homebuyers, however, presenting them with pertinent market information is still very helpful. For example:
Show your clients not only the homes they wish to buy but homes similar to the one they wish to sell in order to set both expectations according to the market.
Educate your clients about the advantages and disadvantages of closing two transactions on the same day (the home they are selling and the one they are buying).
Offer an option of renting in-between homes if that could be advantageous.
Be extra diligent on qualifying the buyers for their home if your clients wish to sell and buy their homes on the same day.
Check and double-check that the buyers are ready to close on time.
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Buyers Looking To Downsize
Buyers in this category can be further divided into two groups: “empty nesters” who are downsizing because their children have grown up and moved out, or “family transitioners” who are experiencing financial hardship, a divorce, or another unfortunate event that has caused them to scale down their expenses. When categorizing these types of clients, it’s important to know if the buyers are looking for a smaller home, or looking to lower costs. To do this, you can:
Ask your client to write out a wish list of the characteristics of their dream home.
Ask your client to pick the top three “must-haves” on their wish list so that you can help them determine which items they can do without.
Use extra caution if these buyers wish to close on the home they are selling on the same day as the home they are buying.
Buyers Looking To Relocate
Some clients move due to a job relocation, family desires, or simply because they want to experience a different neighborhood, town, or state. These clients often face the difficulty of purchasing a home in an area in which they are totally unfamiliar. Therefore, real estate professionals may need to spend extra time helping these buyers find the best neighborhoods and market prices. To do this, you can:
Tell your clients where to find information on a specific neighborhood, such as crime rates, school system data, etc., themselves. This serves two purposes:
It takes the liability off the real estate licensee, which is good because these issues fall outside our area of expertise.
Showing the buyers where to find the information empowers them to know where to go if they want to check the information in the future.
Put the interests of your buyer clients ahead of your own—if it is best for the buyers to rent housing until they get to know the area, suggest it.
Second-homebuyers are likely buying a home purely for enjoyment and relaxation. As in the previous situations, it’s a good idea to have the buyer pre-approved, if he or she needs financing, prior to beginning a search. As always, the resources you offer can vary depending on the characteristics your client is searching for in their second dream home. There are a number of areas you can investigate to get a clearer picture of what they want. For example:
Determine how familiar they are with the area in which they are searching.
Calculate how wide their search area reaches.
Discuss whether they are working with multiple agents across a wide area.
Ask what their timetable is for purchasing their second home.
Ask if this search is a serious endeavor if they are just merely “browsing.”
For more information on helping all types of clients through the home-buying process, enroll in our course, “Educating Homebuyers.”