As with many things, home buying has significantly changed in recent years. Larger down payments, varying interest rates, and other factors all play a role in the reluctance of potential buyers to move forward in the process.
Still, according to the National Association of REALTORS® (NAR), 2018 first-quarter pending home sales were up 0.5 percent. Agents say this is a sign that home buyer anxiety is being alleviated.
However, to effectively address long-term apprehension, REALTORS® must understand common buyer hesitation. Here are some of the major concerns:
While only 3 percent of overall prospective home buyers report qualifying for a mortgage is a problem (according to REALTOR®.com research), a staggering 65 percent are under the age of 45. Researchers say this signals the problem will only get worse in the coming years.
Respondents said the reasons they don’t qualify include poor credit, inability to find an acceptable home in their budget, lack of immediately-accessible funds, and other factors.
However, the same research found that 85 percent of these prospective buyers aren’t giving up. That means REALTORS® can work with these individuals — providing them with information and insight into how they can position themselves for future homeownership.
Payments and Fees
Another concern for prospective buyers is the necessity for sometimes sizable down payments, as well as closing costs and other fees. While most home buyers understand that the days of zero down payment are gone, many are simply unable to secure the necessary up-front funds.
Part of this is due to student debt. Recent graduates (2015-2017) owe an average of $37,172 per person, according to data gathered by Student Loan Hero. Credit card fees are also a common factor. As more funds go to meeting minimum payment requirements, less reserve cash is available.
Some people can cover home buying expenses but have concerns about paying for repairs or replacing necessary equipment (such as a water heater or air conditioner). While renting, these folks know unexpected expenses are not their problem.
Another complaint from potential home buyers is investor competition. Many times, real estate investors are searching for homes in the same range as first-time home buyers. The popularity of “house flip” television programs in recent years has made the practice widely-favored.
For sellers, cash buyers do have some advantage over those who plan to go through a loan, since these buyers don’t require mortgage approvals, bank appraisals, home inspections, and other considerations.
First-time home buyers account for one out of every three homes sold in the United States, according to research by the National Association of REALTORS®.
REALTORS® can help these buyers stay positive and motivated by offering helpful advice such as the creation of a new home fund, reduction in discretionary spending, and more. It’s also wise to ensure home buyers know about the wealth of loan options available to them.
Many buyers are hesitant to move forward in the process for fear they might be taken advantage of. Working with trusted and dependable individuals makes this scenario impossible.
For more than 22 years, Southern Title has committed itself to helping simplify the home buying process. We want to make it easy for you to get the information you need. Check out our new home buyer video on our website /buyers/index, or feel free to call us anytime at (386) 204-0182.