First time buyers are a crucial element in the property market. They’re the only source of genuinely new demand in the system that helps keep the property market expanding. They’re the oil in the machinery that keeps everyone moving up the property ladder.
Rising property prices have made things tricky for first time buyers in recent years. And that, in turn, affects everyone else in the property market. In this post we’ll look at a few things you need to know if you’re selling property, or even selling your house, and aiming at the crucial first time buyer (or FTB) market.
First what are the advantages of selling to first time buyers?
First time buyers are usually highly motivated buyers. They’re keen to buy now and move into their first home ASAP. First time buyers are chain free buyers, and pretty much as good as cash buyers in that regard. If you want to sell a property fast a first time buyer can be the ideal kind of buyer to get for it.
First time buyers can often benefit from Government incentives, like Help to Buy and a number of other schemes. There’s also talk of launching a new Generation Buy scheme to help first time buyers even more. (But be aware these schemes may only benefit new build buyers rather than resales though.)
And what are the drawbacks of selling to first time buyers?
First time buyers are usually financially stretched and often buying at the top of their budget. They’re also the ‘red L-platers’ of the house buying world, knowing little or nothing about the process. They may have unrealistic expectations. There’s also a risk that FTBs can get ‘cold feet’ and a sale to them can fall through as, unlike other buyers, they don’t always have to move.
But if you’re selling property first time buyers can be a market well worth pitching your property at. Here are a few things you need to know:
* Certain types of property are better for selling to first time buyers than others. The ideal FTB property is usually a small (1-2 bedroomed) house or flat that is at or below the average property price for the area.
* Only property in certain price brackets is readily saleable to FTBs. Here’s a simple way to find out if yours could be suitable: Find out the monthly mortgage repayments for a minimum 80% mortgage based on your likely selling price (although many FTBs will have an even larger mortgage). If that’s not affordable to a person or couple on the average income for your area then it’s probably not going to be suitable for FTBs.
* Condition is important to FTBs. By the time they’ve found a deposit and money for setting up a home FTBs don’t usually have much left over for repairs and maintenance. And they often don’t have the know-how or confidence to tackle a project either.
Properties in good condition, needing only cosmetic improvement or even completely refurbished properties are the best for selling to these buyers. Although it seems like a ‘cheap’ fixer-upper would make a good buy for a FTB it’s often not the case in practice.
* Remember that property pitched at FTBs is often in direct competition with new builds – new builds on smart new developments with glitzy show homes and tempting ‘buy me’ offers. FTBs are likely to be also viewing new developments and will be wowed by the contemporary fixtures and fittings and value for money these seem to offer.
If you’re selling a non-new build try to present or stage your property like a new build to help get FTBs interested. If it’s struggling to compete push the other advantages like space, period features and a great location that new builds often can’t compete with.
* Sell to your first time buyer by aiming to understand them better. The usual image of a FTB is that they are young, footloose-and-fancy-free, either a single or a couple, and without children. While that’s often the case it’s not always true. The average age of FTBs is now higher than in the past at around 33. So your buyer could well be a family or even a more mature person.
Don’t lose an opportunity to sell by stereotyping your potential buyer. Think about the other types of buyer that your property, and that area, might attract too.
* A little hand holding can help get a faster sale! Remember that FTBs usually know nothing about the house hunting and buying process including matters such as budgeting, applying for a mortgage, getting a mortgage, making an offer, Stamp Duty (FTBs can benefit from Stamp Duty concessions) and the legal conveyancing process. Any information or help you can offer them will help the process go more smoothly.
Don’t be afraid to chase things up if the sale starts to drag – the FTB may be waiting and wondering what happens next and waiting for the initiative from you.
* Use marketing methods that FTBs are likely to respond to. Assuming that many FTBs are in the younger age groups marketing methods like social media and video tours/viewings will help you catch the attention of this buyer group. Make sure you’re using these methods.
Buyers in younger age groups want to find out about the latest properties to buy and shortlist the best ones from their phone .... before even thinking about viewing them in person.
This article looks at Can You Sell A House On Social Media?
First time buyers are undoubtedly an important source of buyers in the property market, and so it’s well worth pitching your property at them if you can. However, they’re not the only type of potential buyer to consider.
This article reveals The 5 Types Of House Buyer.