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Catering To First-time Buyers: Addressing An Underserved Buyer Pool

Published on Thursday - August 07, 2014

The current state of the housing sector is far better than it was just one year ago, but it still has a long way to go. More and more homeowners are finally able to increase their equity, as home values have continued their upward trajectory. Additionally, lending practices have begun to ease, making the prospect of owning a home a reality for many of those who had resigned to renting over the past few years. Of particular concern, however, is a distinct lack of first-time buyers actively participating in the housing market. Experts believe that this void is directly correlated to the lack of traction the recovery has gained. Economic circumstances have prevented an entire generation of potential buyers from contributing to the housing market. According to the Mortgage Bankers Association, a lack of participation by first-time buyers is expected to drop both new and existing home sales figures for the first time since 2010.

So what can investors and agents do to cater this pivotal, and underserved, buyer pool?

Fortunately, encouraging signs have signaled an end to their financial struggles. The crisis that has burdened millennials for years appears to be easing. Experts predict that a strengthening labor force will allow millennials to contribute to the housing market within two to five years. The influx of new buyers is expected to stimulate the U.S. housing sector. But how can investors and agents do their part to encourage first-time buyers to purchase a home? What can be done to make sure the influx of new buyers is helped through the process?

“Satisfying first-time buyers is critical for real estate firms to differentiate themselves,” said J.D. Power’s Christina Cooley in a statement. “It’s up to the agent to build confidence in buyers by educating them and demonstrating a commitment to working in the best interest of the customer.”

According to the latest J.D. Power Home Buyer/Seller Satisfaction Survey, first-time buyers are particularly encouraged by communication. Because of their lack of knowledge regarding new home purchases, they appreciate those who are willing to walk them through the process, step-by-step. Agents, firms and investors that take the time to explain the intricacies of buying a home will, therefore, find catering to the needs of first-time buyers relatively easy – and profitable.

Some of the most prominent real estate firms have already discovered the secret to satisfying first-time buyers. Among first-time homebuyers, brokerages affiliated with Century 21 had the highest overall customer satisfaction, followed by brokerages affiliated with Prudential Real Estate. Scoring below the average were brokerages affiliated with Re/Max, Coldwell Banker, and Keller Williams.
The study measured customer satisfaction among first-time and repeat homebuyers and sellers with brokerages affiliated with the nation’s biggest franchisors. J.D. Power measures overall satisfaction for homebuyers in four areas: agent/salesperson; real estate office; closing process; and variety of additional services.

Not surprisingly, buyers valued the relationship they developed with their investor or agent the most. This goes hand-in-hand with the concept of communication I mentioned earlier. Fostering a relationship with healthy and open lines of communication will allow the buyer to feel at ease. More importantly, first-time buyers that view their relationship with an agent or investor as a quality one are more inclined to use their services.

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