Selling to a first time home buyer is much more difficult than selling your house to a buyer who has already owned one, two, three or more homes before.
That’s because there are two concerns that almost all first time home owners have in common, and understanding them can make the difference between receiving a full-price offer from a qualified first-time buyer or having to put up with lowball offers from a more experienced buyer who tries to nickel-and-dime you just for the fun of seeing how low you will go.
Overly Cautious and Rounding Up Cash
First, because buying a first home will likely be the largest, most expensive purchase they will make in their entire lives, the first-time buyer is going to be extremely cautious and more than a little nervous about becoming a home owner.
The first-time buyer is not “moving up” and does not have the equity from an existing home that they are selling to help fund the purchase of their new home. Instead, they raise the money for their down payment, closing costs and moving expenses by scraping together their own savings, and maybe even borrowing from friends and family.
If you think back to when you purchased your first home, all of this no doubt sounds familiar.
Not Much Wiggle Room for the Unexpected
Second, because many first-time home buyers put nearly every penny they have into their down payment and closing costs, they have very little money left in the bank — which means they have very little cash left for unexpected repairs, home improvements or remodeling.
The first-time buyer will be afraid of the unknown — things like the heating or cooling system going out, a leaky roof, or a major electrical problem. They will usually ask for a home warranty in their purchase offer, and certainly will have a complete home inspection done before they agree to buy your house.
But, if your home does not show well from the start, you may not even get to the point where you receive an offer from this type of buyer!
In other words, if your house doesn’t make a good first impression or if it looks dirty, cluttered and poorly maintained, the first-time buyer is going to wonder what else is possibly wrong with your house if the simple things have been left unattended. Makes sense, right?
Bottom Line: Is It Worth It to Work with a First-Time Home Buyer?
So with all of these things in mind — the fact that a first-time home buyer is going to be extremely nervous about making the largest purchase in their life, the likelihood that they are going to be “cash poor” after scraping together the money for their down payment and closing costs, and the reality that your home for sale will need to show very, very well to attract this type of buyer — we go back to our original question. Is it really worth going through all of the trouble to sell your house to the first-time home buyer?
The answer is an unqualified “Yes!”, assuming that you don’t want to be involved in an endless negotiation with a more experienced buyer who will do their best to drive down your asking price, only to walk away from the negotiating table after they have worn you out. It makes a lot more sense to put in a little extra time and effort and market your place directly to the first-time, less experienced homeowner.
Your job when selling to the first-time owner is to put their mind at ease, to show them a beautiful home that is updated and move-in ready, to offer the buyer a new place that will allow them to enjoy the pride of owning their first home without having to spend a lot of extra money after the sale closes.
There are five easy things that you can do that will turn the first time home buyer on — we like to think of them as first-time home buyer “hot buttons” — and in the next post we’ll dig into the details of how you can attract these buyers to your home for sale.