Dealing with the most common first-time homebuyer anxieties
With home prices on the rise and supply at an all-time low, the demand for housing is at a fever pitch.
Homes are not staying on the market long. Many offers are coming in at above the listed price and, believe it or not, a sizeable number of those buyers throwing caution to the wind, are entering the market for the first-time.
And while these first-time homebuyers may be more bold and brazen than ever before, that doesn’t mean they aren’t plowing forth into their housing investment without being overcome with some sort of anxiety.
In fact, anxiety is quite common among first-time homebuyers, and some of these anxieties are even overpowering enough for the buyer to bail out of the idea of buying a home.
Some buyers can cope with these anxieties better than others. Some think they are alone feeling what they are feeling and are overcome by the worry.
But the fact is, many buyers have the same concerns. They feel the same somersaults in their belly. And they have the same thought questioning whether this purchase is a good idea or not.
Recently, an article in Inman identified some of the most common anxieties and offered some suggestions on how to deal with them to ensure a smoother purchase of that first home.
Haggling with a seller over the price of a home is a bit of a lost art today. When there were plenty of homes to consider, and it was a buyer’s market, offers on prices would almost always come in under the list price, forcing sellers to negotiate the best deal.
Nowadays, offers seem to fly in fast and furious, and often multiple offers come in above the listed price.
With Millennials making up the brunt of the housing market, buying homes for the first time, that generation is more willing to gamble on their offer. Sure, it might be more than the list, but if it guarantees that they win the bid, then it’s worth it to get the home you actually want rather than settling for a second, third or fourth choice.
However, the fear still exists of paying too much for a home. Buyers don’t necessarily want to drain their savings, so even though they usually go into the process of making an offer with some understanding of price, and what’s normal for the market, the uncertainty of the future and of getting good value on the home tends to kick in.
Most of the time, this anxiety kicks in based on unpreparedness. It’s important for potential buyers to understand all the costs necessary that go into owning a home, ensuring they are pre-approved, and have a monthly budget of expenses created. Having actual proof they can afford a home, and that it all makes sense, boosts confidence and makes them more ready to make those over-list offers.
It’s probably safe to say that with most house hunting, the potential buyer is hoping their eventual purchase will be their dream home.
However, new buyers tend to really want their dream home to be the first home they purchase. It’s a little bit naivety, a little bit pie in the sky. And when it turns out that might be the case, the potential first-time buyers become discouraged.
These buyers look at homes and for each positive they find with a home there is often a corresponding negative – or at least something quirky about the home that gives them pause.
But these types of things are good learning experiences. As was written in the Inman article, sometimes you have to kiss a lot of frogs before you get the fairytale ending.
What is important for first-time buyers to understand from the jump is that a first-home purchase is usually limited by budget. Once they understand that, and how equity on a home – even one that may not be a dream home – can still build wealth and lead to an eventual purchase of that dream home in future years.
Some first-time buyers are gung-ho about buying a home that needs work. They envision themselves as the next Property Brothers or Bob Villa. Others loathe the notion of an inspection finding an issue that they might have to take care of as a new owner.
In both cases, there can be anxiety. For the energized renovators, maybe they don’t realize the additional cost associated with a potential purchase and how it may not fit into their budget right away, if ever.
These renovations are not only a drain on finances but also on time – do the new owners have the time to make the changes they want for the new home?
If not, they shouldn’t buy the home, no matter how much they like it. If it’s going to create a financial stress or burden or not be able to be resolved for some time, it’s probably best to consider an alternative option.
As for those who dread the inspections, they should know that some issues are common and easily fixable without causing much agita. And even if there is a bigger issue, then it’s good to know in advance to see if it’s something that the buyer can manage or if it’s severe enough to have them consider another property instead.
As always, education about the process goes a long way to helping a buyer understand where they best fit in the market.
As a first-time homebuyer, it’s easy to forget sometimes that you aren’t the only person looking to buy a home. And while the competition might be invisible, it’s there, it’s active, and it’s fast-moving.
As such, many first timers are caught unawares and miss out on opportunities to make an offer on a home while debating the plusses and minuses.
And, with interest rates still really low, that competition can become even more fierce. Offers above the list price. Offers willing to be made without home inspections. Offers coming in from buyers who have not seen the property up close. These are all tactics some buyers will resort to in a competitive market, and for the rookie homebuyer, it can become overwhelming.
So much so, that the first-time buyer will either slow down their search or quit on it altogether. This apathetic approach may lead to the potential buyer never actually buying a home.
Once again, it’s important to understand that there are going to be losses along the way. You can’t win them all. The best competitors shake off a loss and immediately pursue the next win.
For first-time homebuyers, it’s all about learning why an offer wasn’t accepted; why the timing wasn’t right. And then, put together a better game plan to try and avoid those potential pitfalls. Knowing how to play the game will ultimately make them more successful at it.
First-time buyers often grow impatient with the market. They might be driven to cut corners or attempt to fast forward through certain steps just to try and get their purchase to go through.
This often leads to more frustration and longer delays when they can’t make the purchase as they initially thought.
Then there are little things that add up that a lot of first-time buyers don’t really know about. There are closing costs, supplemental tax bills insurance costs and premiums, the potential for Homeowner’s Associations, among other costs.
Of course, the great fear is that one mistake, no matter how small, with any of these portions of the homebuying process, can derail the whole purchase.
First-time buyers would be wise to work with a REALTOR® who can serve as both an advocate and a mentor in an effort to buy a home. They can be there to answer all the questions, no matter how big or small, and to also offer support and expertise during the entirety of the process, from the first tour to the handing over of the keys, defusing much of the built-up stress and anxiety along the way.