Amy Hoak’s recent Wall Street Journal piece on selling to first-time homebuyers covered some necessary ground: stage your home because these are people who are scared of renovations; offer to help with closing costs because these are people who are cash-poor. My pal Zac Bissonnette went further on WalletPop, arguing that you should throw in some furniture or offer a furnishings allowance. (Which is attractive, but be a little careful at closing, because the state and the Feds want to make sure that offers you make in connection with a transaction aren’t a tax dodge.)
What both these fine articles left out was the sense of first-time buyers as — what’s the term? Oh, yeah, a pain in the @$#. Whether you’re selling by yourself (FSBO, or For Sale By Owner) or working with an agent, new buyers require more education and more hand-holding, and they generally have less of a sense of value than more experienced homeowners. So let me add in these extra 5 tips:
- Sell to the parents. New buyers may have their heads turned by a fresh coat of paint, but it’s their parents — experienced homebuyers — who find sturdy infrastructure like new boilers sexy. If you need to sell the value of something that’s not flashy, mention it to your shopper’s mom and dad.
- Introduce the potential buyer to a neighbor. If you’re a realtor, you want to introduce your clients to each other; growing your sphere of influence — I think of it as a little tribe of followers — is good selling anyway. But with first-timers, who may be particularly stymied as to why it’s raining under their porch, it’s especially helpful to have a neighbor who explains that you need to clean the gutters twice a year. If that neighbor was introduced by you, all the gratitude for the neighbor’s help eventually sticks on your brand. If you’re selling FSBO, the buyer may wonder why you’re leaving the ‘hood, so introducing them to a neighbor who still has roots in the area makes the location seem “okay.”
- Be prepared to be the backup. The Manhattan market, where I work, is currently doing a funny thing: properties sit and sit, and then suddenly a bidding war flares up over one of them, and then the losers move on to the next property in line. My boss, Gil Neary, calls it the “prettiest girl at the dance” theory: everyone wants to dance with the prettiest girl, and when she goes off with someone, then the crowd’s eyes move on to the next-prettiest girl. Obviously, in this kind of market, you want to be the prettiest girl — which often means asking the lowest price. But if you aren’t, you still want to be ready to sell when it’s your “turn.” So it pays to focus on your closest competitors and then take a slight price cut the minute one of them goes into contract. It’s sort of like tossing your hair when the cute blonde steps out of the room: it moves the attention to you. If you can cut your price, even a little, when Property A goes into contract, that might help move you up in line to become Property B — and help you pick up the customers who lost out on Property A and are now extra-eager to buy.
- Provide lists of all kinds of service people. I’m still smarting over the $3 million sale I lost because the client was afraid of heights and I didn’t have a window-shade guy. (It was an eighth-floor apartment in an all-glass building. The right shades would have made her feel safe there.) For a first-time buyer, you want to be able to provide a window-shade guy, a plumber, a tree doctor, a decorator, and whatever else you can think of, because making those service calls is going to seem daunting to a former renter. The mountain ain’t coming to Mohammed, so teach Mohammed how to go to the mountain. You’ll want to be able to offer mortgage broker and lawyer recommendations, too, but to protect yourself, you’ll want to offer lists with more than just one name. Most real estate agents I know offer the names of three lawyers that they’ve worked with. If you’re selling FSBO, start asking your family and friends for names now.
- Be ready with comps. Unlike experienced buyers, who know value when they see it, new buyers might not understand why your extra backyard space should be worth a few thousand more. So tell them. Provide them with “comps,” examples of recent sales in the neighborhood, just like an appraiser would. And be sure to explain how your property stacks up. I just did this — unsuccessfully — for a potential first-time buyer. It didn’t sell him, but when the next first-time buyer came along, I had my list ready. You know who liked the place? Her dad.
