What Are Your Buyers Afraid Of?

We all know how first-time home buyers can be a little apprehensive when making their first purchase…but if the truth be known… most experienced homebuyers fail to retain enough knowledge from their last purchase to keep them fear free in their next one.

Home-buying mistakes are easily blamed on the Buyers Agent…for good reason. As an agent, your fiduciary duty is to protect their best interest. Here are a few areas where you need to thoroughly educate your buyers to avoid costly “rookie” mistakes…and a chance to build trust and future “referral clout”!  

UP-FRONT MOVE IN COSTS:

Most buyers will not even consider these costs... but they are there for almost every move. Even if you move yourself there will be costs involved to rent a truck… but beyond that there will be window treatments, new furniture, decorations, appliances etc. *(NAHB claims a new homeowner will spend an average of $7400 in the first 2 years of home ownership… including $4900 in the first year on related items.)

REPAIRS:

1)    According to a NAR survey 92% of homebuyers want to purchase a move in ready home. They do not want to have to go through the aggravation of remodeling a kitchen or bath…but for those who do…. WARNING …Objects in mirror may be more expensive than they appear! Ever watch the HGTV shows where they do remodels? There are always….repeat always…overruns in the budget! So for the buyer client who wants to the updates suggest they add 15-20% to the budget for unforeseen overruns.

2)    Many buyers might throw a perfectly good home to the curb because of perceived major flaws found during an inspection. Remember: It is the home inspectors’ job to raise red flags and point out the obvious and hidden defects in a structure. But what may sound horrible in a report, (because of the way it is written or because of the buyer being “Constructional Challenged”), may actually be an easy fix… Forewarn the buyer and prepare them for these kinds of issues. We once had a client who refused to put an offer in on a property they had fallen in love with because of plaster cracks above some of the doors in the home.  After an inspection by a licensed contractor we determined it was cosmetic and was repaired with a $5 can of plaster and some touch up paint.

3)    Don’t let your client have a “renters mentality” with things like paint and carpet. When they were renting, they didn’t have the ability to change many of these items…but once they own the home, paint and floor coverings are relatively inexpensive….

 ON-GOING COST OF OWNERSHIP:

Many first time buyers are not aware of the ongoing costs of homeownership because their landlords have always paid these costs from their monthly rent checks. Kiplinger Reports states to estimate the following for a $250,000 home (expenses escrowed over a five year period):

ü $2500-$3000 per year for Repairs and Routine Maintenance such as painting, appliances, HVAC, roofing, carpet, plumbing, etc.

ü  $4000 per year for Insurance and Taxes…(most likely escrowed by the lender.)

ü $1200-$2400 per year for Lawn Care…even if you do it yourself you will still need to have a mower and gas, seed and fertilizer etc.

ü $300 a year for pest control.

ü ???? Cost of your time to maintain your home and yard.

 Strongly urge your buyers to get a home warranty to “insure” against repairs for covered items…make sure they understand what the warranty covers and most importantly… what it doesn’t cover. The money paid for the warranty is like an escrow account for when a major break down occurs.

Since there are certain to be unanticipated costs which show up in the first year of homeownership… make sure your clients cushion their budgets so they don’t panic when the dishwasher springs a leak and ruins the hardwood floors.

We hope this information helps you to ease your clients fears of homeownership.

Eddie Brown ©2013