Comprehending the struggles your client faces during the home buying process gives you (the Realtor) a 360 degree perspective on what trials & tribulations you can expect to face together and will give you a leg-up in the realtor/client relationship game. In order to get a better idea of the road ahead, let’s start with Fannie Mae’s breakdown of “The Lifecycle of a Homebuyer” (aka the 4 main phases throughout the journey the Buyer will face).
Phase 1: Discovery
The Buyer is at the “potential” point in this stage of the home buying process. They’re not wholly invested but are beginning to dip their toe into the home buying pool; Browsing and entertaining the idea of whether or not to pursue their curiosity of home hunting, they may be starting to drive past open houses or randomly perusing real estate content online. (Although it’s okay to casually reach out to people in this phase, it’s recommended not to spend too much time and energy until they’ve become more dedicated to the home buying process; See Phase 2.)
Phase 2: Research
*NOTE: This is the phase where, as the Realtor, you should be making your first point of contact with the client.*
The “Potential Buyer” has now become the “Buyer”. They are committing to the process and are actively researching homes and Realtors. Inserting yourself at this point in their venture is crucial to landing a serious client. (It should also be taken into consideration that according to recent NARs Report, about 44% of homebuyers research homes online first, whereas only 16% contact an agent first. So to properly gain exposure to prospects, you may want to consider advertising your services on sites that have related traction; Zillow, Trulia, Social Media, etc. are good places to start!)
Once you’ve officially established yourself as their Agent, it’s now time to research with them and for them. Listen to them regarding what they want and help them understand what their situation calls for. For example, if they have children, help them consider the schools in the neighborhoods they’re interested in (or suggest a different area).
Phase 3: Selection
Your client is now beginning to narrow down their home selections. You can play an essential role in helping them determine their future homestead by giving input and suggestions (but remember, it’s ultimately their decision).
Phase 4: Closing
You’ve made it- the closing! This is when the home officially becomes the client. (And you receive your payout for a job well done!)
If you’d like to look at a more comprehensive outline of what other steps can expect to take, you can also review the “Journey of a Homebuyer”. This consists of 9 levels that must be completed before the client can call themselves a “Homeowner” (and the Agent can redeem their reward for helping their client accomplish their home-owning goal).
Stage 1: The prospect is “considering” buying a home
HomeAdvantage reported that 52% of interested parties begin by researching areas they want to buy in.
Stage 2: They go online to look at properties.
NARs reported, in 2018, that 44% of buyers find homes online first before finding a real estate agent.
Stage 3: Next, they’ll educate themselves on the process.
In 2018, NARs reported that 55% of buyers use the internet as their source of research.
Stage 4: They connect with a Real Estate Agent
In 2018, NARs reported buyers work with an agent 87% of the time.
Stage 5: The client gets Pre-Approved
A Pre-Approval Letter is based on data you submit to a lender, which will provide a ballpark estimate of how much you can borrow. As time marches forward, it’s becoming more prevalent for clients to start the application process before reaching out to an agent. (Meaning, Stage 5 and stage 4 will eventually be switched.)
Stage 6: They tour homes.
According to Redfin’s analysis, homes with open houses sell, on average, for $9,046 more and spend seven fewer days on the market than homes without open houses.
Stage 7: A home is selected.
On average, a homebuyer will spend 30-60 days shopping, 14-60 days from contract to close, and likely 14-45 days or so before your first mortgage payment is due.
Stage 8: An offer is made…
By submitting an offer, you also need to be prepared to provide earnest money, which shows the seller you’re serious about buying the house and can range from $500 to 10 percent of the agreed-upon price.
Stage 9: The closing happens!
On average, the closing process takes about 30 days (one of the exceptions being special first-time homebuyers programs which usually take between 35-45 days).
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